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THE   AMERICAN 

"COMMERCIAL  INVASION" 

OF   EUROPE 


BY 


FRANK    A.   VANDKRLIP 

VICE-PRESIDENT    NATIONAL    CITY    HANK    OF    NEW    VoKK  ;      lORMERLY 
ASSISTANT    SECRETARY    OF    THE    UNITED    STATES    TREASURY 


OF  TH! 

UNIVERSITY 


REPUBLISHED    FROM 

SCRIBNER'S    MAGAZINE 

1902 


Hf 


O 


Copyright,    1902,    by 
FRANK.    A.    \ANDERLIP 


THE    AMERICAN 

"COMMERCIAL    INVASION" 

OF    EUROPE 


1 04704 


THE    AMERICAN 

"COMMERCIAL    INVASION'' 

OF    EUROPE 

I 

E^X,LAXD  has  been  hard  hit  by  the  Transvaal  War, 
but  is  still  the  richest  country  in  the  world;  France  is 
without  initiative,  satisfied  with  returns  on  past  achievements; 
Germany  shows  the  greatest  energy  and  initiative  in  Europe, 
but  has  travelled  too  fast;  America  has  an  unparalleled  com- 
bination of  natural  resources  and  initiative,  and  will  go  on  to 
greater  achievements." 

This  was  a  summing  up  of  national  qualifications  in  the 
world's  industrial  struggle,  by  the  Russian  ^Minister  of  Finance, 
M.  de  Witte. 

I  had  asked  AL  de  Witte  to  give  his  views  of  the  relative 
positions  of  the  great  nations  in  the  world-wide  industrial  con- 
test. There  is  no  man  whose  answer  to  such  a  (|uestion  may 
be  listened  to  with  more  interest.  Sergius  de  Witte  is  a  man 
of  whom  we  have  heard  much,  but  from  whom  we  have  heard 
little.  In  the  minds  of  many  he  is  Europe's  foremost  states- 
man. He  shapes  the  policies  of  Europe's  mightiest  empire, 
lie  watches  with  greatest  care  the  varying  fmancial  currents, 
and  is  in  the  closest  touch  with  cummercial  and  industrial 
tendencies. 

His  Excellency  was  in  his  private  office  in  the  Finance 
Ministry  in  St.  Petersburg  seated  at  a  great  tlat-topped  desk, 
piled   high   with    official   problems,    neatly   sorted   and    tagged 

t 


2  THE    AMERICAN 

ready  for  his  examination.  It  was  Sunday,  but  he  had  been 
hard  at  work  all  the  morning.  While  1  was  with  him  1  heard 
him  make  appointments  as  late  as  eleven  o'clock  that  night. 
It  is  easy  to  see  why  he  has  gained  the  reputation  for  being 
the  hardest  worked  man  in  Europe.  Broad,  strong,  forceful, 
but  with  the  repose  and  atmosphere  of  reserve  power  which 
mark  most  great  men,  his  personality  gave  added  interest  to 
his  reputation.  He  reached  for  a  fresh  cigarette,  from  a  case 
he  had  been  steadily  depleting,  and  touched  it  to  an  odd  elec- 
trical contrivance  on  his  desk,  which  automatically  lighted  it. 
Then  he  leaned  back  reflectively  and  spoke  with  a  freedom  in 
refreshing  contrast  to  the  reserve  of  many  lesser  officials. 

"  England  is  still  the  richest  country  in  the  world."  he 
said.  "  This  Transvaal  trouble  has  had  marked  ettect  on  the 
finances  of  that  country,  and  indirectly  has  affected  the  finances 
of  every  country  in  Europe.  If  Mr.  Chamberlain  will  stop 
here,  if  he  does  not  ])ut  the  burden  of  any  more  such  cam- 
paigns on  England,  she  may  be  able  to  maintain  her  pre- 
eminent position.  Should  she  have  too  many  Chamberlains 
and  too  many  Transvaal  campaigns  she  might  be  ruined.  But 
up  to  the  present  time  English  pre-eminence  is  not  seriously 
shaken.  Tlie  nation  is  still  in  the  strongest  financial  position 
of  all  the  great  powers,  and  may  reasonably  expect  to  con- 
tinue there.  Erance  is  like  a  small  rentier.  She  is  contented 
with  a  modest  income:  contented  to  sit  with  her  laji  filled 
with  securities,  representing  jiast  achievements  and  present 
investments,  and  cut  off  the  couj'ions.  Erance  is  not  looking 
for  new  industrial  fields:  she  is  building  no  new  railroads:  she 
is  making  no  commercial  coiuiuests.  Erance  is  satisfied  iitnv 
simj)ly  to  sit  down  at  home,  contented  to  reap  the  small 
rewards  that  are  naturally  liei'-.  While  those  rewards  may 
seem  small,  howe\er.  they  become  in  the  aggregate  great 
enough  to  ])lace  her  in  the  forefmnt  financially.  Germany,  in 
lier  natural  resources,  is  i)oorer  than  l-'ngland  or  I'rance.  but 
she  is  rich  in  initiative  and  enersj-v.     The  C.ennan  nation  oft'ers 


•COMMERCIAL    INVASION"    OF    EUROPE 


the  most  striking  example  of  initiative  and  energy  that  can  he 
found  in  Euroi)e.  Industrially,  she  ha.s  made  astonishing 
strides.  But  along  many  lines  the  ])rogress  has  been  unnat- 
ural and  too  rapid,  and  trouble  may   come  of  that. 

"  America  is  already  one  of  the  richest  countries  in  the 
world;  jierhaps,  in  natural  resources.  (|uite  the  richest.  There 
we  tind  not  only  remarkable  natural  richness,  but  combined 
with  that  wealth  the  most  pronounced  initiative  met  with  any- 
where. With  such  a  combination  the  country  is  bound  to  make 
the  ver\-  greatest  progress.  It  will  go  on  and  on,  and  will  l^e 
greater   and    still   greater.      America  is   especially   fortunate   in 

1 


An  America 


lie  Steppes  of  Russia. 


that  she  has  no  great  military  burden.     Militarism  is  the  night- 
mare and  the  ruin  of  e\ery  Eiu-oi)ean  finance  minister. 

"  The  industrial  crisis  which  you  tnid  here  in  Russia  is  not 
confined  to  this  country.  You  will  find  it  more  or  less  pro- 
nounced all  over  Europe.  Alany  enterprises  -have  depended 
largely  upon  English  capital.  England's  Transvaal  War  has 
forced  her  to  draw  in  her  wealth,  and  that  contraction  has  had 
a  marked  eflect  upon  the  industries  of  all  luu-ope.  People 
who  were  carrying  on  business  with  the  aid,  directly  or  indi- 
rectly, of  luiglish  loans,  have  been  forced  to  make  other 
financial  arrangements,  and  fre(|ucntl\-  have  been  compelled 
to  curtail  their  operations.  That  reduction  of  credit  and  with- 
drawal of  capital   have  acted  and   reacted  until   they  have  be- 


4  THE    AMERICAN 

come  important  factors  in  l)rini;ing-  aljont  wide-spread  industrial 
depression. 

"  England  has  not  been  alone,  however,  in  expending  large 
amounts  of  capital  in  military  campaigns.  The  powers  have 
all  spent  great  sums  in  the  last  year  in  the  military  operations 
in  China.  The  iloating  of  loans  in  that  connection  has  made 
demands  upon  capital  that  have  further  embarrassed  industrial 
affairs.  Here  in  Jxussia  we  have  had,  in  addition  to  those 
unfavorable  influences,  other  embarrassing  conditions.  The 
Government  has  been  building  less  railroad  than  has  been 
constructed  at  an}-  time  during  the  last  ten  years.  As  the 
Government  is  the  chief  customer  for  railroad  supplies,  de- 
pression has  naturally  followed  in  all  industries  depending  upon 
railroad  construction.  Then  there  have  been  industrial  enter- 
prises organized  here  on  a  not  too  sound  hnancial  basis.  But 
as  we  get  farther  away  from  .some  of  these  special  causes  of 
depression,  I  think  the  industrial  crisis  will  end." 

There  can  be  no  doubt  of  the  interest  of  ]\I.  de  ^^"itte  in 
the  sul)ject  he  was  discussing.  Russia's  need  for  capital  is  like 
Sahara's  thirst  for  \\ater.  There  is  probably  no  man  in  Europe 
more  anxious  than  he  to  see  the  whole  earth  smile  under  the 
blessings  of  jjcace,  the  particular  blessings  in  which  he  is  inter- 
ested being  a  low  rate  of  interest  and  a  market  hungry  for 
bonds. 

I  met  M.  de  Witte,  as  I  met  all  the  other  finance  ministers 
of  Europe,  on  a  tour  which  J  made  last  year  to  obtain  the 
Euro])ean  ]X)int  of  view  regarding  America's  industrial  exjxin- 
sion.  The  European  view  of  the  C(.)mpetitive  positions  which  the 
great  nations  occupy  in  the  struggle  for  international  trade  de- 
velopment is  just  now  a  matter  «if  keen  interest  to  the  people 
of  the  United  States.  As  an  officer  in  the  financial  department 
of  the  (iovernment.  cliu-ing  the  jieriod  of  the  most  extraordinary 
development  in  the  whole  history  of  our  foreign  trade  relations, 
I  was  especially  interested  in  this  subject.  I  wanted  the  point 
of  view  and  conclusions  of  some  of  the  men  who  were  equally 


"COMMKRCIAL    INVASION"    (^F    KTROPK  5 

interested  observers,  but  who  were  hmkiiii;'  at  llic  (leveU)i)nicnt 
from  without  rather  than  from  within,  l-'or  four  \  cars  1  had 
seen  at  close  range  tlie  growth  of  a  faxorahlc  trade  balance 
which  had  assumed  a  total  in  that  brief  ])eriod  greater  than  had 
been  the  net  trade  balance  from  the  founding  of  the  ( lovern- 
ment  up  to  that  time.     That  was  a  phenomenon  which  had  had 


An  Amen.an-cqiuppca  LLau.  Lu..   .>.liuli  i'.i:>bes  tlie  l'yi.unuls  «i   t^vpt. 

few  parallels  in  our  economic  history,  and  the  desire  to  study  it 
from  the  European  point  of  view  led  me  to  \isit  nearly  all  the 
countries  of  Europe.  I  was  offered  rather  unusual  facilities  for 
obtaining  the  views  of  men  most  intluential  in  political  life  and 
commercial  affairs.  The  (lii)lomatic  representatives  at  Wash- 
ington introduced  me  to  the  finance  ministers  of  their  home 
governments,  and  through  the  foreign  treasiuw  officers  I  was 
able   to  meet    the   heads  of  all   the   imperial    and   state   banks; 


6  THE    AMERICAN 

ihrungh  other  cluinncls.  i)i-ominent  bank  officers  and  industrial 
leaders.  It  is  my  purpose  to  give  some  of  the  observations  and 
deductions  which  resulted  from  this  tour. 

The  sul)jcct  1  discussed  with  these  distinguished  foreigners 
is  one  regarding  which  our  i)ub]ic  has  been  pretty  thoroughly 
enlightened  in  the  last  live  years,  and  it  is  one  of  which  the 
European  public  has  heard  almost  as  much  in  the  English  and 
Continental  newspapers,  but  from  quite  an  opposite  point  of 
view.  When  the  amount  of  our  sales  to  foreign  countries 
passed  the  $1,000,000,000  mark  in  1897,  we  began  to  congrat- 
ulate ourselves  on  the  strides  we  were  making  in  the  markets 
of  the  world.  The  record  was  followed  by  steadily  growing 
totals,  until  now  we  have,  in  a  twelvemonth,  sent  to  other 
nations  commodities  to  the  value  of  $1,500,000,000.  The  mean- 
ing of  that  total  is  emphasized  if  we  look  back  and  find  it 
compares  with  an  average  during  the  ten  years  ending  1896  of 
$825,000,000. 

While  our  sales  to  foreign  countries  have  grown  so  pro- 
digiously, the  other  side  of  our  financial  account  during  these 
last  five  or  six  years  has  shown  no  i)roi)ortionate  increase.  We 
have  bought  from  the  foreigners  an  average  of  only  $800,- 
000.000  a  }ear,  and  that  total  has  shown  little  tendency  to 
expand.  It  was  this  fact,  this  mighty  development  of  our 
sales,  while  our  jiurchases  \\erc,  comj^jaratively.  on  a  declining 
scale,  which  ])i1ed  u])  in  half  a  dozen  ye;n"s  a  favorable  trade 
balance  so  enormous  as  to  startle  the  world.  In  the  last  six 
years  we  have  sold  in  merchandise,  produce,  and  manufactures 
82,000,000,000  more  than  we  have  bought;  while  in  all  our 
history,  from  the  l)eginning  of  the  Government  uj)  to  six  years 
ago,  the  foreign  trade  balance  in  our  fax'or  had  aggregated  a 
net  total  of  only  v$383, 000,000. 

The  significance  of  these  sur})rising  totals  was  recognized 
on  both  sides  of  the  Atlrmtic.  An  .malysis  of  them  brought 
out  features  more  imi)ortant  than  the  \astness  of  the  aggre- 
gate.     Heretofore  our  sales  had  been   made  up  almost  whollv 


COMMERCIAL    INVASION"    OF    EUROPE 


Drawn  /'rom  a  pholograp/i 


The  span  of  the  bridge  for  ihc  automatic  railways  is  328  feet,  and  the  bridge  is  movable  for  about 
one  thousand  leet  on  the  wharl. 


Drawn  from  a  /•/wtogr,i/>h 

The  capacity  o(  each  elevator  is  from  forty  to  fifty  tons  per  hour.     Tlic  wt-iKhi  ol  each  eli-v.ilnr. 
with  its  corresponding  bridge,  is  about  one  hundred  ions. 

American  Coal-handlini,'  Machinery  (Elevators  and  Automatic  Railways)  in  Germany 


8 


THE    AMERICAN 


of  foodstuffs  and  raw  materials.  Europe  was  the  workshop. 
But  that  has  changed,  and  we  find,  year  after  year,  an  aston- 
ishing increase  in  our  exports  of  manufactured  articles,  an  in- 
crease that  in  the  last  two  or  three  years  reached  totals  which 
gave  anijjle  basis  for  the  popular  talk  of  our  invasion  of  the 
European  industrial  fields.  Our  exports  of  manufactured  articles 
in  the  decade  prior  to  1897  averaged  $163,000,000  annually. 
In  1898  our  sales  of  manufactured  articles  to  foreign  customers 
jumped  to  $290,000,000,  the  next  year  to  $339,000,000.  the 
next  to  $434,000,000. 

These  figures,  showing  a  steady  invasion  by  our  manufact- 
urers of  foreign  industrial  fields,  have  a  natural  corollary.  As 
exports  of  manufactures  increased,  our  imports  of  the  handi- 
work of  foreign  .shops  showed  an  even  more  rajMd  decline.  Our 
manufacturers  were  not  onl}-  inxading  the  foreigner's  own  mar- 
kets, meeting  him  at  his  threshold  with  a  new  competition,  but 
they  were  taking  away  from  him  his  greatest  market — the  United 

States.  We  have  in  the  last  half- 
dozen  years  1)een  manufacturing 
for  ourselves  a  vast  amount  of 
goods,  such  as  we  have  been  ac- 
customed to  buy  abroad. 

One  can  turn  from  a  contem- 
plation of  these  great  totals  to  an 
examination  of  the  records  made 
in  recent  years  by  individual  indus- 
tries, and  find  in  detail  facts  upon 
which  to  base  a  belief  that  the 
United  States  has  acquired,  or  is 
acfjuiring.  supreiuacy  in  the  world's 
markets.  So  many  industries  have 
been  sending  rapidly  increasing 
contributions  to  swell  the  rising 
tide  of  our  foreign  conunerce  that  it  is  difllcult  to  tell  anv  detailed 
story  of  .\mcrican  commercial  expansion  without  making  it  read 


^5W 


Drif.fn  from  a  (•hot.T^rafih. 

An  American  Type-writer  in  Ui;and 


"COMMERCIAL    INVASION"    OF    EUROPE  9 

like  a  trade  catalogue.  The  increase  in  our  exports  of  manufact- 
ured articles  can.  in  the  main,  be  traced  to  advances  made  in  the 
manufacture  c)f  iron  and  steel,  and  to  the  display  of  inx'cntixe 
talent  in  the  making  of  machinery.     The  dcvclojiment   of  our 


Drawn  from  a  photograph. 

An  American  Cash-register  in  Durban. 


grasp  on  the  world's  markets  for  articles  manufactured' from 
iron  and  steel  has  been  no  surprise  to  those  who  early  recog- 
nized the  position  of  America  in  respect  to  the  raw  materials 
from  which  those  articles  are  produced.  America  unquestion- 
ablv  possesses  advantages,  in  respect  to  her  iron  ore  and  her 
coal  mines,  far  suj^crior  to  those  of  any  other  country,  and.  based 
solidly  upon  that  superiority,  has  already  become  the  greatest 
producer  of  iron  and  steel  in  the  world. 

American  locomotives,  running  on  American  rails,  now  whis- 
tle past  the  Pyramids  and  across  the  long  Siberian  steppes. 
They  carry  the  Hindoo  pilgrims  from  all  parts  of  their  empire 
to  the  sacred  waters  of  the  Ganges.  Three  years  ago  there 
was  but  one  American  locomotive  in  the  United  Kingdom: 
to-day  there  is  not  a  road  of  im])ortance  there  on  which  trains 
are  not  being  pulled  by  .American  engines.  The  .\merican  loco- 
motive has  successfully  invadefl  France.  The  Manchurian  Rail- 
wav.  which  is  the  real  beginning  of  oriental   railwav-building. 


,0  THE    AMERICAN 

bought  all  its  rails  and  rolling-stock  in  the  United  States. 
American  bridges  span  rivers  on  every  continent.  American 
cranes  are  swinging  over  many  foreign  moles.  Wherever  there 
are  extensive  harvests  there  may  be  found  American  machinery 
to  gather  the  grain.  In  ever}-  great  market  of  the  world  tools 
can  have  no  better  recommendation  than  the  mark  "  Made  in 
America." 

We  have  long  heUl  supremacy  as  a  producer  of  cotton.  We 
are  now  gaining  supremacy  as  makers  of  cloth.  American  cot- 
tons are  finding  their  way  into  the  markets  of  every  country. 
They  can  be  found  in  Manchester,  as  well  as  on  the  shores  of 
Africa  and  in  the  native  shops  of  the  Orient.  Bread  is  baked 
in  Palestine  from  flour  made  in  ^Minneapolis.  American  wind- 
mills are  working  east  of  the  Jordan  and  in  the  land  of  Bashan. 
Phonographs  are  making  a  conquest  of  all  tongues.  The  Chry- 
santhemum banner  of  Japan  floats  from  the  palace  of  the  Mikado 
on  a  flag-staff  cut  from  a  Washington  forest,  as  does  the  banner 
of  St.  George  from  Windsor  Castle.  The  American  tvpe-setting 
machines  are  used  by  foreign  newspapers,  and  our  cash-registers 

keep  accounts  for  scores  of 
nations.  America  makes 
sewing  -  machines  for  the 
world.  Our  bicycles  are 
standards  of  excellence 
everywhere.  Our  tvpc- 
writers  are  winning  their 
way  wherever  a  written  lan- 
guage is  used.  In  all  kinds 
Draum /rem  a /■hotog, „/•>!.  of  clcctrical  appliauccs  we 

American-equipped  Electric  C.irs  in  Cairo  ha\e  become  the  foremost 

producer.  In  many  F.u- 
roperm  cities  American  dynamos  light  streets  and  operate  rail- 
ways. Much  of  the  machinery  that  is  to  electrifv  T.ondon 
tram  lines  is  now  being  built  in  Pittsburg.  The  American  shoe 
has  captured  the  favor  of  all   Europe,  and   the  foreign  makers 


"COMMERCIAL    INVASION"    OF    F.UROPE  ii 

are  hastening  to  import  our  machinery  that  they  may  compete 
with  our  makers.     In  the  Far  East,  in  the  capital  of  Korea,  the 

Hermit  Nation,  there  was  recently  inaugurated,  with  noisv  nuisic 
and  tlving  hamiers.  an  electric  railway,  built  of  American  matc- 


Dravm  from  a  plwtogt 


American-equipped  Electric  Cars  in  Caii 


rial,  by  a  San   Francisco  engineer,  and  now  it  is  operated   l)y 
American  motormen. 

One  might  go  on  without  end,  telling  in  detail  the  story 
of  American  industrial  growth  and  commercial  expansion.  In 
the  list  of  our  triumphs  we  would  fmd  that  American  exports 
have  not  been  confined  to  specialties  nor  limited  as  to  markets. 
We  have  been  successfully  meeting  competition  everywhere. 
America  has   sent   coals  to   Newcastle,   cotton  to  ^lanchester. 


,2  THE    AMERICAN 

cutlery  to  Sheffield,  potatoes  to  Ireland,  champagnes  to  France, 
watches  lu  Switzerland,  and  "  Rhine  wine  "'  to  Germany. 

(Jur  public  has  generally  looked  upon  the  development  of 
our  foreign  trade  as  only  one  of  the  incidents  in  the  remark- 
able period  of  prosperity  which  we  have  been  enjoying,  and 
has  not,  i)erhaps,  clearly  analyzed  its  full  significance.  The 
European,  1  found,  had  come  nearer  to  a  real  understanding 
of  the  situation. 

A  distinguished  Berlin  economist  outlined  an  idea  which 
seemed  to  me  interesting.  "  Two  or  three  generations  ago,"' 
he  said,  "  there  were  families  in  .America  living  a  life  of  almost 
complete  industrial  independence.  Not  only  was  all  the  neces- 
sary food  raised,  but  within  the  household  there  were  spinning 
and  weaving  and  the  ai)i)lication  of  all  necessary  trades.  The 
invention  of  machinery,  the  development  of  factory  life,  the 
specialization  of  industry,  made  such  independence  impossible. 
That  which  happened  to  the  family  a  hundred  years  ago  has 
hapijencd  now  to  the  nation.  Specialization  has  gone  on,  and 
concentration,  combinations,  and  trusts  have  made  it  as  impos- 
sible for  the  small  manufacturer  to  compete  with  the  great  as 
it  was  for  the  hand-loom  and  the  spinning-wheel  to  compete 
with  the  factory.  The  ]>crfect  and  instant  comnnmication  be- 
tween distant  parts  of  the  world,  the  cheapening  of  transpor- 
tation, the  wider  knowledge  of  every  countrv.  its  products  and 
its  needs,  have  brought  about  an  interdependence  of  nations 
that  is  now  almost  as  great  as  the  dependence  of  one  class  of 
industrial  workers  on  another.  This  national  (lependence.  this 
necessity  of  every  country  to  more  and  more  largelv  bnv  and 
sell  in  foreign  markets,  is  forcing  every  nation,  whether  it  wills 
or  not,  into  participation  in  an  international  industrial  struggle. 
That  is  the  key-note  of  the  new  century.  Whoever  will  fore- 
cast the  future  of  nations  can  now  make  no  more  useful  study 
than  an  examination  of  their  comparative  industrial  equipment. 

"  TTistory  is  becoming  more  and  more  the  story  of  indus- 
trial development."  be  continued.     "The  strength  of  a  nation 


COMMERCIAL    lN\'ASION  "   OF    EUROPE 


'3 


becomes  more  nearly  measured  by  iis  wealth,  its  importance  in 
the  world's  progress  by  its  relative  commercial  position.  His- 
tory  will    more   and    more    be   written    in    Icd<;ers   and   balance- 


fi-ii-tun  front  n  phnfn^rnph. 

An  American  Windmill  Pumpinu   Equipment  lor  lrri^lltion  al  Buiiibay. 

The  windmill  is  thirty  feet  in  diameter. 

sheets,  in  trade  statistics,  and  in  the  figures  which  show  the 
results  of  industrial  conquests  or  defeats.  ^Modern  iron-clads 
and  smokeless  powder  have  largely  taken  out  of  warfare  the 
element    of    personal    bravery,    and    have    substituted    technical 


hy  Otto  11.   Backer  from  a  (•Iwtcgmf'h. 

AN   AMERICAN   BRIDGE   IN   BURMA    IN   THE   COURSE   OF   CONSTRUCTION. 

The  Gotkeik  Vi,duct  over  the  Chungzoune.   Burma.     The  completed  viaduct  is  2.260  feet   lonR.  and  at 

this  point  is  820  feet  high.     It  was  made  in  sections  in  America  and 

shipped  a  distance  of  15,000  miles. 


'•COMMERCIAL    INVASION"    OI-    EUROPE  15 

skill  and  executive  ability.  Many  uf  the  same  qualities  which 
win  great  industrial  battles  are  to-day  potent  in  deciding  the 
results  of  military  campaigns.  Connnercialism  in  its  highest 
sense  has  been  the  real  ol)ject  back  of  half  the  military  move- 
ments of  the  last  decade,  it  ma\  all  seem  \er}-  sordid  and 
unromantic,  but  1  believe  that  a  study  of  the  comparative 
price-currents  of  nations,  an  analysis  of  trade  balances,  an  un- 
derstanding of  the  statistics  of  production  and  consumption, 
will  give  the  data  which  are  now  neetled  in  making  a  forecast 
of  a  nation's  history." 

There  are  two  phases  to  the  signihcance  of  the  American 
grasp  of  the  world's  markets.  The  obvious  phase  is  the  devel- 
opment of  our  own  industries  which  must  follow  such  a  con- 
quest. If  our  factories  are  to  be  great  enough  to  supply  our 
own  wants  and  in  addition  turn  out  a  surplus  so  large  in 
volume  and  so  low  in  price  as  to  become  one  of  the  most 
important  factors  in  the  world's  markets,  we  can  count  on  an 
industrial  growth  of  which  we  have  heretofore  hardly  dreamed. 

There  is  another  phase  to  our  conquest  of  foreign  ma'rkets, 
however,  and  that  is  its  efTect  upon  the  other  nations  of  the 
world.  If  a  much  larger  share  of  the  world's  manufacturing  is 
to  be  done  in  America,  it  means  a  lesser  share  will  be  done 
elsewhere.  The  pictures  which  some  entluisiastic  observers  of 
our  foreign  trade  delight  to  draw,  of  a  time  when  our  exports 
have  so  increased  and  our  imports  so  diminished,  that  we  will 
not  only  make  everything  we  want  for  ourselves,  but  a  very 
large  part  of  what  the  world  wants  besides,  is  a  picture  which 
offers  neither  a  probable  forecast  nor  a  desirable  result.  Natu- 
rally we  cannot  go  on  selling  to  the  world  a  great  surplus  of 
food  products  and  manufactured  articles  without  buying  from 
the  world  in  return.  Statistics  indicate  tliat  we  have  for  the 
last  two  or  three  years  been  sending  Europe  annually  some- 
thing like  $600,000,000  more  than  we  have  been  buying. 
Europe  has  not  been  paying  for  this  in  gnUl.  During  the  six 
years  in  which  we  built  up  a  sur])lus  foreign  trade  balance  of 


i6  THE    AMERICAN 

$2,744,000,000,  we  have  received  from  the  rest  of  the  world  a 
net  balance  in  gold  of  only  $132,000,000. 

Une  of  the  must  unanswerable  of  linancial  conundrums  is 
how  the  world  has  settled  its  debt  to  us  in  the  past  and  is  to 
settle  it  in  the  future.  If  these  statistics  of  our  foreign  trade 
are  to  be  depended  upon,  it  would  seem  as  if  we  had  placed 
the  world  in  our  debt  in  the  last  six  years  to  such  an  extent 
that  we  ought  to  be  about  ready  to  foreclose  our  lien.  As  a 
matter  of  fact  international  finances  do  not  show  that  we  have 
any  unusual  command  in  the  world's  money  markets;  our 
bankers  have  no  extraordinary  credits  with  their  foreign  corre- 
spondents. There  seems  to  be  no  vast  accumulation  of  funds 
upon  which  we  can  draw  at  will,  nor  is  there  other  evidence 
that  any  large  part  of  this  balance  is  still  unsettled. 

The  question  of  how  a  $600,000,000  annual  trade  balance 
is  to  be  settled  has  been  a  rather  interesting  puzzle  to  our 
financiers;  to  European  finance  ministers  and  bankers,  to  man- 
ufacturers and  workmen,  it  is  a  subject  of  the  most  intense 
and  inmiediate  interest. 

The  answer  as  to  how  that  trade  balance  has  so  far  been 
settled  requires  a  good  deal  of  explanation  which  must  be  based 
on  very  unsatisfactory  data.  The  i)rediction  as  to  how  it  is  to 
be  settled  in  the  future  leads  to  most  interesting  speculation 
regarding  financial  conditions. 

In  tlie  first  place  the  problem  is  not  so  dif^cult  as  it  looks 
on  its  face,  ^^1^ile  Government  reports  show  that  we  have 
sold  to  Euro]ie  roundly  $600,000,000  a  year  more  than  we 
have  bought,  it  may  be  certain  that  the  total  is  considerably 
below  those  figures.  I  have  been  close  enough  to  the  making 
of  Government  customs  statistics  to  know  something  of  the 
difficulties.  No  fault  can  be  found  with  the  thoroughness  of 
the  work,  but  it  is  (juitc  impossible  to  strike  any  accurate  in- 
ternational trade  balances  when  the  figures  on  one  side  of  the 
ledger  must  come  from  importers,  who  have  the  strongest 
motives  for  undervaluing  imports  in  their  statements.     I  would 


"COMMERCIAL    INVASION"    OF    EUROPE  17 

hardly  like  lo  make  a  j;uoss  regarding  the  axerage  percentage 
of  undervaluation  tor  all  our  imports,  but  it  can,  at  the  outset 
of  the  consideration  of  this  problem,  be  set  down  as  a  very 
large  amount.  Then  there  are  items  of  great  importance  of 
which  our  customs  statistics  can  take  no  note.  Our  lun'opean 
tourists  are  generally  supposed  to  spend  $100,000,000  a  year. 
We  pay  for  freights  to  the  owners  of  foreign  steamship  lines 
perhaps  $75,000,000  more.  There  is  a  great  stream  made  up 
of  numberless  small  remittances,  sent  home  by  prosperous  im- 
migrants. And  lastl}-,  and  most  important  of  all.  there  has  l)cen 
going  on  a  repurchase  by  American  investors  of  our  securities 
which  have  been  held  in  foreign  markets.  This,  in  the  aggregate 
for  the  last  ten  years,  assumes  enormous  proportions.  The  best 
of  statisticians  can  do  nothing  more  than  guess  at  the  amount, 
but  it  has  been  great  enough,  in  the  main,  to  counterbalance 
the  excess  of  our  foreign  sales  over  our  purchases,  after  the 
totals  of  travellers"  expenses,  ocean  freights,  and  the  home 
contributions  of  immigrants  have  been  deducted.  This  return 
of  our  securities  cannot  go  on  forever;  indeed,  there  is  pretty 
good  reason  to  believe  it  cannot  go  on  much  longer,  for  the 
reason  that  there  are  now  few  ^Vmerican  securities  held  in 
Europe   to  return. 

It  is  the  j^ractice  of  the  great  banks  of  Europe,  particularly 
of  Germany,  to  take  charge  of  the  securities  owned  b\-  a  vast 
clientage  of  investors.  \\'hen  in  the  Imperial  Reichsbank  and 
in  the  Deutsche  Bank  in  Berlin,  1  was  taken  into  great  vaults 
whose  walls  and  floors  were  covered  with  cases  like  an  inmiense 
library,  containing  stocks  and  1)onds  belonging  to  clients  of  the 
banks  and  held  there  for  the  collection  of  coupons  and  for  safe- 
keeping. In  each  of  the  banks  there  were  securities  re])resent- 
ing  some  2.000,000.000  marks.  It  was  interesting  to  be  .shown 
great  cases  of  empty  shelves  which  had  formerly  been  set  apart 
for  American  securities,  and  which  now  held  only  here  and 
there  scattered  packages.  This  was  the  visible  evidence  of 
what  an  examinatirjn  of  investors'  strong  boxes  would  show  in 


r 


i8 


THE    AMERICAN 


all  those  European  countries  ^vhich  have  in  years  past  found  in 
America  the  most  protitable  tielcl  for  investment. 

If  our  foreii^n  trade  is  to  continue  to  hold  the  same  relation 
between  imports  and  exports  that  has  been  ruling  for  the  last 
few  years — if  we  are  to  go  on  selling  Europe,  say,  $600,000,000 
a  vear  more  than  we  buy — there  will  be  then,  after  liberal  re- 
ductions for  travellers'  expenditures,  ocean  freights  (an  item 
which  the  development  of  American  shipping  may  materially 
decrease),    and    immigrant    remittances,    a    balance    due   us    of 


c  ILscJ  on  ail  AiiKMicin  K.iilri.,id— Weight  hii;ln}-ei-ht 
Tons  (without  tender). 


$300,000,000  or  $400,000,000  a  }ear.     How  is  that  balance  to 
be  paid? 

That  question  is.  perhai)S,  the  most  interesting  of  any  that 
can  be  pro])Ounded  to-day  in  the  held  of  international  finance. 
I  a.sked  every  finance  minister  of  Europe  and  the  head  of  every 
imperial  bank  for  an  answer  to  it.  I  found  it  a  (|uestion  over 
which  thc'N-  had  pondered  much  and  ne\er  with  feelings  of  sat- 
isfaction. 1"hat  h'urope  camiot  ])a_\-  such  a  l)a]ance  in  gold  is 
obvious;  that  we  would  not  desire  to  have  it  paid  in  that  way 
is  clear.  The  conclusion  which  I  found  nearly  every  important 
European  linancier  had  already  reached,  was  tluit  America  will 


COMMERCIAL    INVASION"    OF    EUROPE 


^9 


sooner  or  later  enter  the  l-luropean  seeurity  markets;  that  the 
tables  in  international  investments  are  to  be  completely  tnrned; 
that  we  are  to  hear  nd  more  df  the  I'.n^iish  ur  llie  (ierman 
syndicate  making-  investments  in  America.  Inn  rather  of  the 
American  syndicate  l)ecoming-  a  most  important  factor  in  the 
foreii^n  investment  held. 

The  low  interest  rates  which  for  the  most  i)art  have  been 
rnling  in  America  for  several  years,  have  everywhere  attracted 
attention.  The  belief  is  growinQ-  that  New  York  is  to  become 
the  lowest  money  market  in  the  world.  There  has  been  par- 
ticnlar  interest  in   the  ad\ances  made  in   the  market   price   of 


.i^5or5f.---i,t~-<-i 


Type  of  Passenger  Locomotive  Used  on  the  Orient  Express,  Pans  to  Constantinople 
—Weight  about  Fifty-eight  Tons. 


investment  sccnrities.  The  cpiotations  which  ha\e  been  made 
for  high-grade  bcjnds  have  been  the  wonder  of  Enrojje.  While 
market  ({notations  ha\e  shown  United  States  two  per  cent, 
bonds  selling  at  iio,  the  three  per  cent,  bonds  of  the  Imperial 
German  Empire  were  (pioted  at  8(S.  English  consols  bearing- 
two  and  three-qnarters  per  cent,  sold  at  93,  Russian  four  per 
cent,  gold  bonds  at  96,  and  Italian  Government  issues  at  prices 
netting  the  investor  over  four  per  cent. 

These  comparisons  are  anything  but  pleasing  to  lun'opean 
treasury  of^cials.  They  are  (pnck  to  see.  ho\\e\er.  tluat  such 
a  com])arisc)n  is  not  entirel_\-  fair.     (  )in-  ( loNcrnment  bonds  are 


20  THE    AMERICAN 

free  from  taxes,  and,  even  more  important  than  that,  they  have 
a  special  use  and  vakie  to  national  banks.  A  national  bank 
may  issue  circulation  against  deposits  of  these  bonds  with  the 
United  States  Treasury,  or  may  receive  public  deposits  if  it 
puts  u])  Government  bonds  as  security,  and  so  the  market  value 
of  our  Government  issues,  and  particularly  of  our  two  per  cent, 
bonds,  cannot  be  taken  as  a  measure  of  the  investment  return 
which  capitalists  are  willing  to  take.  It  is  a  fact,  however,  that 
there  are  over  $500,000,000  of  our  Government  bonds  not  held 
by  national  banks  to  secure  circulation  or  as  a  basis  for  public 
deposits.  Those  $500,000,000  are  held  solely  for  investment, 
and  are  maintained  at  market  prices  which  net  the  investor  less 
than  one  and  three-quarters  per  cent.,  quotations  which  cer- 
tainly put  the  credit  of  this  Government  far  above  that  enjoyed 
by  any  other  nation. 

There  are  other  evidences  that  the  United  States  is  becom- 
ing the  best  market  in  the  world  for  the  highest  grade  of 
industrial  securities.  First-class  railroad  bonds,  as,  for  example, 
those  of  the  Pennsyhania  or  New  York  Central,  sell  on  a  basis 
that  nets  the  investor  as  low  a  rate  as  do  English  railroad 
bonds,  while  on  the  Continent  the  highest  grade  of  corporate 
securities  sell  at  i)rices  to  realize  higher  rates  of  interest  to  the 
investor  than  do  our  best  securities. 

That  the  I'nitcd  States  gives  promises  of  reaching  a  posi- 
tion of  industrial  supremacy  in  the  world's  trade,  is  acknowl- 
edged to-day  the  world  over.  Undoubtedly  we  have  been  too 
flamboyant  in  some  of  our  claims.  The  industrial  world  as  yet 
is  bv  no  means  prostrate  at  our  feet,  ^^'e  have  before  us  a 
long  campaign  of  hard  work  and  intelligent  i)rosecution  of 
evcrv  advantage  which  we  have,  before  we  reach  such  a  posi- 
tion of  industrial  sui)remacy  as  occasional  newspaper  writers 
on  both  sides  of  the  Atlantic  have  given  us  credit  for.  That 
we  have  the  foundation  upon  which  to  build  such  industrial 
supremacv,  however,  cannot  be  doubted  by  anyone  who  is 
familiar  with  tlie  resources  and  abilities  shown  in  our  own  in- 


^'COMMKRCIAL    INVASION"    OF    EUROPE         21 

dustrial  tiekl,  and  makes  iincl]ii;cm  ct)nii)aris(>n  with  llic  con- 
ditions that  obtain  abroad. 

It  ought  cicarly  to  be  kept  in  mind  thai  the  road  to  the 
commercial  domination  of  tlie  world  is  not  a  ck-ar  one  for  us, 
and  that  as  vet  we  are  a  long  wax  from  the  end  of  it.  J'^vidences 
of  that  will  be  found  in  studying  current  sialisiics  of  our  man- 
ufactured exports.  The  rapid  increase  which  has  been  going 
on  for  a  nundjer  of  years  has  halted,  and  for  the  last  fiscal  year 
reports  show  a  decrease.  That  decrease  can  be  accounted  for 
bv  the  fact  that  our  shipments  to  Porto  Rico,  Hawaii,  and  the 
Philippines  are  no  longer  counted  foreign  exports,  but  it  is, 
neverthless.  evident  that  a  halt  has  come  in  the  triun.ii)hant 
march  of  American  manufactures  toward  European  markets. 
An  important  reason  for  this  is  in  the  very  force  of  the  success 
we  have  made.  There  have  been  serious  inroads  made  in  the 
prosperity  of  many  foreign  manufactures  by  our  successful 
competition.  The  depression  has  been  reflected  in  lower  wages 
and  in  decreased  purchasing  power,  and  a  lower  level  of  prices 
which  has  reacted  on  us  in  common  with  the  foreign  manu- 
facturers. 

In  a  good  many  directions  we  have  much  to  learn  in  re- 
gard to  a  successful  prosecution  of  foreign  trade.  The  Germans 
could  give  us  valuable  lessons.  They  are  strong  in  two  par- 
ticulars— strong  in  the  line  of  technical  education,  though  per- 
haps not  superior  to  us,  and  strong  in  ccMnmercial  training 
specially  adapted  to  the  needs  of  their  rei)resentatives  in  foreign 
countries.  In  this  last  particular  we  are  lamentably  weak.  We 
do  not  learn  languages  readily,  and  we  have  been  too  busy 
with  our  home  afi'airs  to  cultivate  what  facility  we  have.  It  is 
a  comparatively  difficult  thing  to  find  trained  business  men, 
born  m  America,  who  speak  fluentl\  two  or  more  Continental 
languages,  and  it  follows  from  that  dit'licultx  that  we  send 
commercial  representatives  to  Iun-oi)e  who  are  under  the  almost 
hopeless  handicap  of  not  speaking  the  language  of  a  cotnitry 
m  which  thev  wish  to  do  business.     Were  it  not  for  the  coming 


22  THE    AMERICAN 

universality  of  tlic  ICnj^lish  language,  the  handicap  would  be  far 
greater  than  it  is.  Unfortunately  the  bad  equipment  of  many 
of  the  commercial  representatives  who  are  sent  abroad  is  not 
confined  to  their  lack  of  knowledge  of  languages.  Frequently 
thev   have   but   vague   ideas  of  the   commercial   geography  of 


An  American  Steel  Hopper-butturn  Coal  Car 

Capacity   loo.cxx)  pounds. 

Europe.  They  are  not  at  all  clear  as  to  what  particular  sec- 
tions are  given  over  to  this  form  of  manufacturing  or  that  field 
of  production.  More  than  half  the  failures  that  have  come  to 
manufacturers  who  have  tried  to  extend  their  foreign  business 
have  resulted  from  the  lack  of  qualifications  in  the  representa- 
tives they  sent  abroad. 

Another  condition  that  is  not  favorable  to  our  development 
is  one  that  is  being  thought  of  a  good  deal  more  in  Europe 
than  at  home.  We  no  longer  are  occupying  the  leading  posi- 
tion in  scientific  mvestigation  having  special  commercial  appli- 
cation. ]\Iany  of  the  most  notable  discoveries  of  the  last  few 
years  in  commercial  chemistry,  electricity,  and  other  fields  of 
scientific  work  having  direct  relation  with  industry  have  been 
made  l)y  foreigners.  The  X-ray  and  the  wireless  telegraph  are 
illustrations  which  would  occur  to  everyone,  but  there  have 
been  numberless  important  discoveries  of  great  value  in  indus- 
trial operations  for  which  we  are  obliged  to  pay  royalty  to 
foreign  inventors.     The  L'nited   States  Government   is  to-day 


"COMMERCIAL    INVASION"    OF    EUROPE  23 

paying  a  royalty  to  a  Gorman  inventor  for  the  use  in  the 
mints  of  a  method  of  rehning  gold  ])y  electrolysis,  a  method 
which  proved  much  cheajjer  than  that  which  had  been  in  com- 
mon use  in  the  Cio\ernment  and  commercial  refineries  up  to 
within  a  year  or  iwo  ago.  Many  such  illustrations  could  be 
gi\en. 

One  of  our  particular  points  of  strength  has  in  it  danger, 
when  carried  too  far.  of  being  an  element  of  decided  weak- 
ness. We  have  profited  greatly  by  our  genius  for  specialization, 
and  our  adoption  of  standard  models  of  machines,  which  can 
be  made  in  great  quantities  at  extremely  low  cost,  in  holding 
closely  to  these  standard  designs,  we  have  fre(inently  lost  sight 
of  foreign  prejudices.  Small  concessions  to  those  prejudices 
might  have  meant  large  sales,  but  our  manufacturers  have  de- 
clined to  make  them.  In  AIoscow,  for  instance,  I  talked  with 
a  merchant  who  had  l)ranc]ies  all  through  Sil)eria.  and  who 
bought  large  consignments  of  ploughs  in  .America.  The  Rus- 
sians do  not  harness  their  horses  as  we  do,  and  our  method  of 
hitching  a  team  to  a  ])longh  is  not  adapted  to  their  use. '  This 
merchant  found  it  im])ossible,  however,  to  get  our  plough 
manufacturers  to  adoi)t  the  slight  changes  which  he  suggested, 
even  when   his  orders  were   for  very  large   quantities,  and  he 


A  Type  of  Freight  Car  in  Use  on  French  Railroads. 

had  to  have  made  in  (lermany  the  t\])e  of  clevis  which  his 
customers  demanded  and  attach  it  to  his  ini| natations  of  Amer- 
ican ploughs. 

The  most  important  of  all  obstacles  that  the  develoi)ment 
of  our  foreign  trade  is  likely  to  encounter  is  the  same  one 
which   has   proved    the    most    dangerous    rock   in    the    path   of 


24  'IHK    AMKRICAN 

Mni^lish  industry — tlic  ^rdwtli  uf  a  spirit  in  trades-unions 
which  attempts  to  regulate  tlie  business  of  employers  in  other 
matters  than  those  relating-  to  wages  and  hours  of  labor.  1  be- 
lieve the  decline  of  English  industry  can  be  attributed  to  the 
success  of  labor  organizations  in  restricting  the  amount  of  work 
a  man  may  be  permitted  to  do,  more  than  to  any  other  single 
cause.  We  have  encountered  that  spirit  too  frequently  in  our 
own  labor  field,  and  it  is  one  which,  if  successfully  persisted  in, 
will  cut  the  ground  of  advantage  fn>ni  under  our  niannfaciurers 
(juiv-ker  than  anything  else  1  know    of. 

It  is  generally  understood  that  our  natural  resources  arc  in 
many  important  particulars  unjiaralleled.  We  patrioticallv  be- 
lieve that  the  ability  of  the  average  American  workman  is 
superior  to  that  of  his  competitor  in  other  countries.  We  are 
all  confident  that  our  form  of  government  olifers  the  solidest 
foundation  ui)on  which  to  build  national  prosjierity.  Our  in- 
<lustries  are  heljjed  rather  than  hampered  by  our  system  of 
federal  taxation,  while  an  examination  of  the  incidence  of  tax- 
ation in  nearly  every  country  abroad  shows  that  a  most  de- 
pressing influence  on  industries  is  exerted  by  the  national 
tax-gatherers. 

There  are  oilier  facts  in  our  favor  not  quite  so  generallv 
understood.  We  have,  for  instance,  a  financial  system,  particu- 
larly in  the  relatiou  of  our  banks  to  e\er\-(lav  business  trans- 
actions, which  gixes  us  as  much  of  an  adxantage  o\er  most  of 
the  Continental  countries  as  would  some  great  labor-saxing 
machine.  The  .\uierican  business  man  whose  operations  are 
even  of  the  most  uioilest  extent  is  certain  to  have  a  bank 
account.  lie  ])a\s  his  bills  with  checks  or  drafts.  When  lie 
wishes  to  extend  bis  operations  he  does  not  borrow  actual 
currency,  but  he  borrows  b:ink  credit.  In  all  bis  transactions 
he  lias  to  aid  him  the  most  fully  develojietl  credit  system  to 
be  fouiul  an\ where  in  the  world  except  in  Great  Britain. 

It  is  almost  beyond  belief  how   little  development  there  has 


COMMKRCIAL    INVASION"    OF    EUROPE 


25 


been  in  this  direction  in  some  of  the  foreign  countries.  A  bank 
check  is  looked  upon  with  suspicion  in  Italy.  Practically  no 
small  tradesmen  would  take  a  check,  and  none  of  them 
keep  a  bank  account.  It  was  still  more  surprising  to  me  t<j 
find  that  such  a  statement  would  be  almost  literally  true  of 
Paris   itself.      I   was  studying   the  mechanism    of   the   luuik  of 


An  American  Oil  Company's  Godowns  at  Nagasaki,  Japan. 

France  under  the  guidance  of  one  of  the  otiicers.  We  went 
into  one  great  room  in  the  old  l)uilding  in  which  there  were 
200  desks  enclosed  in  wire  cages,  all  empt)'  at  the  moment. 
I  asked  what  these  were  for. 

"  These  cages  are  for  our  city  collectors,"  I  was  told. 
"  \\'hen  a  small  merchant  borrows  from  the  P>ank  of  France, 
he  does  not.  as  with  xou  in  America,  borrow  a  bank  credit  and 
have  his  loan  merelv  added  to  his  balance  on  the  books  of  the 


26  THE    AMERICAN 

l)aiik.  With  us  the  nicrchanl,  when  lie  makes  a  loan,  gets  the 
actual  money  and  takes  it  away,  lie  pR)l)ably  has  no  bank 
account  with  us.  Jle  writes  no  checks.  When  the  loan  is  due 
he  does  not,  as  would  he  tlie  case  in  your  hanks,  come  in  and 
pay  his  indebtedness  \\ith  a  check;  insteatl  of  that  we  send  a 
collector  to  him,  and  that  collector  is  rei)aid  the  loan  in  actual 
currency.  Two  hundred  men  start  out  from  the  Bank  of 
France  every  morning  to  collect  matured  loans.  Several  days 
each  month  it  is  necessary  to  send  out  400  men,  and  on  the 
hrst  and  the  fifteenth  of  each  month  600  collectors  go  out." 

These  collectors  were  uniformed  men  carrying  leather 
pouches  in  which  they  have  the  matured  notes  and  which  are 
later  hlled  with  currency  as  the  collections  are  made  from  the 
bank's  borrowers. 

I  .'^tood  at  the  paying-teller's  desk  as  I  went  farther  along 
in  my  tour  of  the  Bank  of  France.  As  I  halted  there  the  man 
who  ha])])erieil  to  be  at  the  window  at  the  moment  ])resented 
a  check  for  50,000  francs.  Ihe  monev  was  counted  out  and 
handed  over  to  him,  stored  away  in  a  big  wallet,  and  he  passed 
on.  I  asked  if  it  were  not  unusual  for  a  man  to  draw  out 
so  much  currency,  and  was  told  that  it  was  not.  It  was  but 
another  illustration  of  how  undexeloped  is  the  banking  system 
of  Ccjntinental  IunM])e  in  its  uses  ])y  the  general  public. 

A  story  that  was  told  nie  on  the  highest  authority  in 
\'ienna  sounds  ludicrously  incredible,  but  it  is  true.  The  Aus- 
trian Government  bought  a  tele])hone  line  from  an  English 
company.  There  was  a  payment  of  1,000.000  guldens  (about 
$400,000)  to  be  made  bv  the  cabinet  officer  corresponding  to 
our  Secretary  of  the  Interior.  The  representative  of  the  Eng- 
lish comj)an_\-  wishecl  to  lie  j)aid  b\  merely  receiving  a  credit 
at  the  Austro-I  lungari.'in  State  Uank.  The  minister  regretted 
that  there  was  no  jjrecedeiit  for  such  a  method  and  insisted  on 
sending  to  the  bank,  which  is  the  government's  fiscal  agent, 
bringing  the  actual  money  to  his  office,  and  counting  it  out 
to  the  I'Jiglishman.  who  in  turn  took  it  back  to  the  same  1)ank, 


"COAIAIERCIAL    INVASIOX"    OF    EUROPE 


27 


where  it  was  again   coiintocl   ami  put   back  in   ilic   vault  fioni 
which  it  had  been  taken  an  hour  before. 

As  cuie  gets  farther  east  the  methods  of  banking  become 
more  primitive.  The  Russian  jieasant  fre<iuently  becomes  a 
man  of  very  considerable  property,  but  he  is  apt  to  cling  to  his 
early  hnancial  method  of  banking  in  his  boots.  He  wears  boots 
with  high  felt  tops,  and  the  leg  of  one  is  the  receiving-teller's 
cage,  and  the  top  of  the  other  is  the  paying-teller's.  He  w^ill 
start  out  in  the  morning  with  his  right  boot-leg  full  of  money. 
His  day's  payments  are  made  out  of  that  boot,  and  his  receipts 


American  Binders  on  a  Hungarian  Estate 


are  deposited  in  the  other.  At  night  he  checks  up  on  his  day's 
financial  operations  and  strikes  a  balance. 

The  banking  methods  of  Continental  Europe  are  cum- 
bersome and  time-consuming,  and  the  people  generally  have 
learned  but  the  first  lessons  in  the  uses  of  credit  machinery. 
That  forms  a  handicap  upon  industry  that  is  just  as  real  as  that 
caused  by  their  persistence  in  using  out-of-date  machines  and 
methods  of  manufacture  which  we  have  long  ago  abruidoncd 
as  slow'-going  and  expensive. 

One  of  the  important  factr»rs  in  the  strength  of  otu"  indus- 
trial position  is  the  un(|Ucstioned  superiority   in   om-  transpor- 


:28  THE    AMERICAN 

tation  system.  If  one  has  fresh  in  mind  the  pictin-e  of  our 
luxurious  trains,  mammoth  engines,  and,  more  important  still, 
our  standard  fifty-ton  freight  cars,  it  makes  the  Europeans  seem 
like  amateurs  in  the  science  of  transportation  when  we  see  their 
toy  cars,  small  locomoti^•es,  and  generally  slow-going  admin- 
istration. U  one  looked  into  the  matter  with  the  eye  of  an 
expert,  studying  the  unit  of  cost,  the  freight  charges  per  ton 
per  mile,  or  the  mileage  rate  for  passenger  service,  and  made 
comparative  statistics  of  the  tonnage  of  freight-trains  and  the 
cost  of  moving  them,  he  would  discover  a  startling  lack  of 
efificiency,  both  in  Great  Britain  and  on  the  Continent.  Per- 
haps it  is  not  quite  fair  to  make  comparisons  of  the  average 
cost  of  freight  trallic  per  ton  per  mile  in  America  and  in  Europe, 
because  the  average  haul  is  nnicli  shorter  there,  and  terminal 
expenses  of  a  haul  are  practically  the  same  whatever  its  length. 
Tlie  average  charge  per  ton  per  mile  on  all  American  railroads 
for  all  classes  of  freight  is  now  less  than  three-quarters  of  a 
cent.  If  we  take  the  statistics  of  the  Eastern  trunk  lines  alone, 
that  figure  would  be  cut  to  about  one-half  cent  per  ton  per  mile. 
It  compares  with  2.4  in  Great  Britain,  2.2  in  France.  1.6  in 
Germany,  and  2.4  in  Russia.  One  of  the  most  remarkable  illus- 
trations of  the  failure  of  Euro])ean  managers  of  industries  to 
keep  ])ace  with  the  times  is  to  be  found  in  a  comparison  of  the 
ef^ciency  of  their  railroads  with  ours.  English  railroads  charge 
three  times  as  much  to  move  a  ton  of  freight  as  it  can  be  moved 
for  in  America.  English  railroad  managers  have  failed  to  grasp 
the  economies  that  are  made  possible  by  heavy  traffic,  by  the 
use  of  engines  of  enormous  capacity  and  freight-cars  that  will 
carry  fifty  tons.  But  if  the  English  railroads  have  failed  to  keep 
pace  with  ours,  what  can  be  said  of  most  of  the  Continental 
roads?  Short  trains  with  pygmy  freight-cars,  each  car  holding 
only  eight  tons,  make  clear  to  any  layman  the  handicap  which 
high  transj-jortation  charges  have  laid  on  industry  all  over  Eu- 
rope. 

In  the  little  town  of  Abo,  in  Finland,  I  was  waiting  one 


COMMERCIAL    INVASION"    OF    KCROPK 


29 


day  for  a  steamer  to  go  to  Stockholm.  In  strolling-  about  the 
town  I  ran  across  another  American.  I  learned  that  he  was 
the  representative  of  a  great  engine  niannfaclttrv,  and  that  he 
had  been  covering  Europe  from  Spain  to  Russia.  lie  had 
been   able   to   sell    his   engines  in   competition    both   with   the 


A  Harvest  Scene  111  the  Highlands  of  Scotland. 

An   American   binder  in  the  field. 


domestic  manufacturers  and  with  the  makers  in  Great  Britain 
and  Germany,  who  had  before  practically  controlled  the  trade. 
I  asked  him  to  analyze  for  me  the  conditions  that  enabled  him 
to  come  into  these  markets  and  .sell  in  successful  competition 
in  spite  of  custom  duties,  in  spite  of  4.000  or  5.000  miles  of 
transportation  charges,  and  in  spite  of  the  fact  that  his  factory 


3©  rHE    AMERICAN 

paid  wurkmen  average  wages  two  or  three  times  as   large  as 
were  paid  by  his  competitors. 

"  Uur  success  in  CDining  into  this  held."  he  said,  "is  very 
largely  due  to  what  in  our  manufacturing  parlance  we  call  the 
making  of  '  standards.'  We  believe  we  know  how  to  make  a 
type  of  engine  which  will  give  tlie  maximum  et^ciency  for  a 
certain  class  of  work.  We  develop  our  standard  type  and  then 
we  stick  to  it.  We  are  enabled  to  manufacture  an  enormous 
numlx'r  of  engines  all  exactly  alike  because  we  ha\e  in  our 
home  market  an  enormous  field.  The  American  i)ul)lic  has 
been  taught  that  a  builder  of  engines  knows  better  how  to 
design  an  engine  than  does  the  individual  who  only  occasionally 
buys  one.  Our  best  manufacturers  absolutely  refuse  to  vary 
from  their  standards.  In  making  a  great  number  of  engines 
exactly  alike  we  can  turn  out  work  at  a  price  that  is  simi)ly 
beyond  the  possible  competition  of  the  ordinars  European 
maker.  ( )ur  lal)or-saving  machines  largely  compensate  for  the 
higher  wages  we  i)ay.  The  English  and  German  manufacturers 
are  harassed  li}'  coiisulting  mechanical  engineers.  A  man  who 
wants  to  buy  an  engine  employs  an  independent  consulting 
engineer.  The  engineer  invariably  feels  that  he  must  earn  his 
fee  by  suggesting  a  change.  Jf  a  dynamo  is  adjusted  to  make 
112  revolutions  a  minute  he  wants  an  engine  l)uill  that  will 
turn  it  113.  The  result  is  that  l-'.nglish  and  ( lerman  manu- 
facturers make  an  endless  number  of  txpes.  What  is  more, 
they  cannot  get  away  from  the  thraldom  that  they  are  in,  and 
adoi)t  our  system  of  standard  types,  because  they  have  not  the 
great,  broad  homogeneous  market  which  America  otTers  to  its 
own  manufacturers.  I  doubt  if  our  manufacturers  appreciate 
the  great  advantage  which  they  have  in  this  home  market 
where  the  inhabitants,  from  the  Atlantic  to  the  Tacihc.  are  very 
nmch  the  same  kind  of  people,  with  very  much  the  s.ame  needs 
and  desires.  In  Tun'ope  every  manufacturer  has  a  sharply  cir- 
cumscribed field,  lie  is  met  by  new  tariffs  and  new  tongues 
only  a  short  distance  from  home  in  whatever  direction  he  goes. 


"COMMKRCIAL    INVASION"    OK    KIKOPK         ji 

The  type  of  article  which  can  he  sold  in  one  (hstrict  may  find 
no  market  in  another  close  hy.  With  us  the  man  in  Los 
Angeles  wears  just  the  same  kind  of  a  hat  as  the  man  in 
Boston,  and  the  iieoi)le  ihruugh  all  that  stretch  of  3.000  miles 
are  dressed  the  same,  and  Iniy,  generally  speaking,  similar  com- 
mochties.      This   broad   l)asis   of  our  own    un])arallclcd    market. 


CfV-.',  -M»e.>iV>?r  0> 


American  Electric  Cars  in  Seul— Tiie  East  Gate. 

An  electric  railway  in  the  capital  of  Korea    built  of  American    material,  by  an  American   engineer,  and 
operated  by  American  motormen. 

which  permits  a  manufacturer  to  successfully  work  out  a 
standard  article,  and  then  j)r()duce  an  enormous  (|uamity  <>f 
that  exact  type,  is  the  most  secure  basis  upon  which  to  build 
a  foreign  trade.  We  alone  have  that  advantage.  Xo  Euro- 
pean maimfacturer  can  successftilly  follow  in  our  lead." 

\\'hen   M.   de   \\'itte  said   that   militarism   is  the  nightmare 
.^nd  the  ruin  of  everv  fmance  minister,  he  spoke  a  trtith   that 


32  'I'HE    AMERICAN 

has  an  aj^plication  tu  this  question  of  industrial  rivalry.  The 
evidence  of  militarism  is  one  of  the  most  ob\ious  things  in 
Europe.  In  Russia  one  is  never  out  of  sight  of  a  line  of 
brown-coated,  stolid-faced  soldiers.  A  tremendously  effective 
display  of  military  strength  is  everywhere  encountered  in  Ger- 
many. One  is  impressed  by  the  cost  of  the  brave  attempts  of 
poor  Italy  to  keep  up  military  appearances  in  the  company 
of  first-class  powers,  a  company  to  which  she  has  not  the 
natural  right  to  aspire.  Xo  one  can  see  this  universal  display 
without  contrasting  its  cost  and  the  burden  which  that  cost 
throws  on  industry,  with  the  comparative  freedom  from  that 
weight  in  the  United  States. 

Europe  spends  annually  for  military  and  naval  establish- 
ment $1,380,000,000.  With  our  army  on  something  of  a  war 
footing,  as  it  is  at  present,  we  have  only  spent  in  the  last  year 
for  the  army  and  navy  $205,000,000. 

Marked  as  is  this  difference  of  cost,  it  by  no  means  meas- 
ures the  real  weight  which  militarism  puts  on  the  European 
powers;  it  is  not  alone  that  Europe  spends  $1,380,000,000  a 
year  to  maintain  the  military  establishment,  but  very  much 
more  important,  from  the  industrial  stand-poin.t,  is  the  fact  that 
Europe  takes  out  of  her  |)roductive  capacity  4,000,000  men. 
These  millions  are  just  in  the  fulness  of  their  youth  and  would 
be  a  tremendous  factor  in  industrial  production.  The  male 
industrial  population  of  Ein"0]:)c,  men  l^etween  the  ages  of 
twenty  and  sixty,  may  be  estimated  at  about  .\ 00,000,000. 
To  withdraw  from  productive  industry  for  military  purposes 
4,000.000  men  means  a  loss  of  four  per  cent.,  and  that  is  in 
addition  to  the  taxes  necessary  to  raise  the  $1,380,000,000  for 
the  annual  maintenance  of  the  military  estal)lislimcnts.  W'licn 
we  perceive  the  full  weight  which  militarism  has  hung  upon 
the  neck  of  industry  in  Europe,  we  see  another  enormous 
handicap  which   is  acting  year  after  year  in   our  favor. 

Tn  the  course  of  a  conversation  with  one  of  the  most  emi- 
nent of  Euro]:)ean   financiers,   a   man   who   has  added  the   dis- 


"COMMERCIAL    liNVASlON  "    OF    tUROPE         3;^ 

tinction  of  notable  ])ul)lio  service  Xo  a  business  career  wliicli 
made  his  name  familiar  in  every  linancial  centre,  1  said  that  one 
of  the  things  which  had  occurred  to  me  in  my  observation  of 
Euro])ean  affairs,  after  seeing  the  ircmeniktus  clTect  upon  I'-iig- 
land  herself  and  through  her  ui)on  all  the  ct)unlries  of  b",ur<)i)e 
of  the  expenses  of  the  Transvaal  War,  was  that  if  a  small  war 
under  modern  conditions  was  to  cost  so  much  as  the  Transvaal 
War  had  cost,  and  was  to  produce  such  an  effect  upon  industry 
and  commercial  conditions  throughout  liurope,  no  great  war 
would  in  the  future  be  possible. 

*'  You  are  wrong,"  he  said. 

''  That  is  not  clear  to  me,"  I  replied.  "  Let  us  take  Russia 
for  illustration.  Suppose  Russia  was  to  begin  a  great  war, 
\\  here  is  she  to  get  the  money?  " 

''  Let  me  tell  you  a  little  of  a  war  of  which  I  know  something." 
he  said.  "  I  happen  to  control  nearly  all  the  railways  of  ^Furkey. 
Turkey  had  a  war  with  Greece.  Now  let  us  see  liow  she  paid 
the  expenses.  She  raised  an  army;  she  i)aid  her  army  nothing. 
She  transported  that  army  of  60,000  men  from  the  interior  of 
Asia  Minor  to  the  Greek  border.  How  did  she  do  that?  She 
commanded  our  railroads  to  carry  them.  Did  we  carry  them? 
Yes.  Have  we  any  pay  for  it?  No;  nor  will  we  ever  ha\e.  So 
she  ])aid  nothing  for  the  transj^ortation  of  her  army.  Then  she 
had  to  arm  it.  What  did  she  do?  She  bought  arms  in  Germany. 
Has  she  paid  for  them?  No.  So  she  raised  her  army,  trans- 
ported it.  and  armed  it.  The  whole  cost  of  that  campaign,  in 
fact,  was  managed  without  any  real  expenditure  of  money. 

"  So  it  would  be  with  Russia.  I  was  once  in  the  interior  of 
Persia.  I  met  there,  2,000  miles  from  tlie  sea,  two  German 
tramps.  I  asked  them  where  they  were  going.  They  said  :  *  The 
Pacific  Ocean  is  off  here  somewhere,  and  we  rue  making  our  w ay 
toward  the  Pacific  Ocean.'  I  asked  them.  '  What  can  you  do?' 
One  said,  'I  can  play  a  trombone.'  The  other  said:  '  I  can 
weave  straw  baskets.'  '  Well.'  I  said,  '  how  ha\e  you  got  here?'' 
*  We  can  walk,  and  the  people  are  good.'  was  the  answer. 


34 


THE    AMERICAN 


"  So  it  is  w  itli  tlic  ann\ .  'Jlic}  can  walk,  and  the  people  are 
good.  If  the  ]jeoi)le  are  not  good,  the  army  gets  its  provisions 
any  way.  The  exi)enses  of  a  war  in  Russia,  so  long  as  it  was  in 
Russia,  would  be  to  that  nation  very  small,  and  the  financial  sit- 
uation is  not  a  commanding  condition  in  an\-  considerations  of 
peace  or  war." 

"  What  is  the  future  of  the  world  with  respect  to  America?  " 
1  asked.  "  If  America  is  to  go  on  in  anything  like  the  way  she 
has  heen  going  in  the  last  three  or  four  years  with  her  foreign 
trade — if  America  is  to  sell  to  Europe  $600,000,000  a  )ear  more 
than  she  buys — what  is  to  be  the  outcome?  " 

"  Something  always  happens,  and  something  will  happen  here. 
1  do  not  know  what  it  is;  I  cannot  foresee  it.  America  so  far 
seems  to  be  making  no  mistake,  but  something  will  haiJjKMi. 
Things  cannot  go  on  as  they  are  going.  It  may  be  that  it  is  your 
colonial  policy.  At  present  there  are  4,000.000  soldiers  in  Eu- 
rope, the  best  of  her  }()ung  manhood,  who  not  only  are  taken 
awa}'  from  ])ro(luction.  but  are  i)aid  for  being  taken  away  from 
production,  and  Europe  is  pa\ing  six  milliards  a  }ear  to  support 
them.  That  six  milliards  does  not  measure  the  cost.  It  is  that, 
plus  the  loss  to  production,  which  hampers  commercial  Europe, 
and  it  is  there  that  }c)U  ha\  c  the  great  advantage.  lUit  what  of 
your  future?  W'e  are  glad  t(^  see  vou  going  in.to  the  Philippines. 
We  will  welcome  the  time  if  you  are  going  to  measure  strength 
with  us  as  a  military  power.  Commercially  you  are  supreme,  but 
if  it  comes  to  a  test  of  military  strength,  if  you  are  going  to 
weight  yoursehes  with  the  militarism  which  is  the  burden  of  lui- 
rope,  then  we  can  sec  some  light." 

I  asked  if  the  tendency  in  Tun-ope  is  in  the  direction  of  a  re- 
duction of  military  forces.  "  Xot  at  all."  he  said.  "  h'rance  hates 
England,  and  England  hales  l-'rance:  (iermany  detests  Erance, 
and  France  detests  German}-;  l\ussia  hates  (iermany.  and  Ger- 
many hates  Russia.  There  it  is  all  around.  There  is  no  hope 
of  reduction.  It  is  impossible.  England  has  hoped  to  come  to 
some  understanding  with  Russia.     I  spent  soiue  time  at  the  home 


"COMMERCIAL    INVASION"    OF    EUROPE         35 

of  Mr.  Chamberlain  not  long  ago,  and  there  was  a  strong  lu)pe 
in  his  mind  that  England  could  come  to  a  better  understanding 
with  Russia.  But  it  is  impossible,  just  as  it  is  impossible  for 
France  and  Germany  to  come  to  an  arrangement.  We  are  no 
longer  afraid  of  France.  W'e  beat  her  from  a  military  stand- 
point, we  have  beaten  her  now  from  a  commercial  stand- 
point, and  there  is  nothing  else.  Commercially  we  hold  a  pretty 
strong"  position  with  France.  After  the  war  we  had  a  treaty 
which  provided  that  we  should  be  equal  to  the  most  favored 
nation.  France  began  making  special  treaties,  but  as  soon  as 
she  concluded  one  we  took  a  place  equally  favored  and  strength- 
ened our  commercial  position.  \\'e  have  beaten  her  commer- 
cially, and  I  see  nothing  to  fear  from  France." 

1  asked  what  he  thought  of  the  great  consolidations  of  Amer- 
ica, such  as  the  steel  combinations. 

'*  An  autocracy  is  good  or  bad  according  to  the  autocrat.  If 
he  is  a  good  autocrat  it  is  the  very  best  thing  possible.  If  he  is 
a  bad  autocrat,  it  is  the  worst.  Who  is  going  to  control  your 
trusts?  That  is  the  whole  question.  It  is  true  you  have  "man- 
aged your  Standard  Oil  in  a  way  that  is  creditable,  and  that  has 
brought  satisfaction  to  the  country.  The  Sugar  trust  has  been 
in  a  measure  managed  as  well.  But  what  assurance  have  we  that 
this  great  Steel  trust  is  to  be  managed  so  well?  That  is  the 
whole  problem.  It  is  the  question  of  men.  Undoubtedly  it 
makes  you  a  much  more  formidable  competitor,  ])ecause  it  con- 
solidates your  interests.  But  you  are  a  young  nation.  Vou  are 
a  young  people.  You  are  young  in  this  business  of  consolida- 
tion. What  has  been  the  world's  history  when  you  put  great 
power  into  the  hands  of  young  men?  It  has  sometimes  been 
abused.  \\'e  shall  watch  with  great  interest  the  course  with  you 
in  this  enormous  combination." 

And  that  is  what  all  Europe  is  doing — watching  with  the 
keenest  interest  our  course  as  it  afifects  our  position  in  the  world's 
industrial  contest. 


II 


IxXDUSTRIALLY  it  is  no  longer  the  Old  World.  It  is  New 
Europe  and  Old  America !  It  is  New  Europe,  a  land  of 
undeveloped  possibilities,  abounding  in  ojjportunity  for  keen 
captains  of  industry.  It  is  mature  America,  the  exemplar  of 
modern  industrial  methods,  perfected  mechanical  ideas,  and  ripe 
economic  policy. 

This  conception  of  a  new  Europe,  looking  toward  mature 
America  for  the  l)est  illustrations  of  industrial  development,  was 
novel  enough  when  I  first  encountered  it,  but  it  becomes  familiar 
as  one  goes  from  country  to  country  and  sees  field  after  field 
rich  in  opportunities  for  the  introduction  of  better  methods,  the 
application  of  better  mechanical  ideas,  and  the  planting  of  more 
correct  economic  policies.  It  was  in  Rome  that  I  first  met  this 
thought  of  a  new  Europe.  I  was  told  that  Italy  was  but  thirt\- 
years  old,  that  the  present  economic  life  dates  back  only  to 
1870,  and  that  the  modern  Roman  is  to-day  an  industrial  pio- 
neer in  a  virgin  country.  Such  a  thought  applied  to  almost 
the  oldest  European  civilization  is  especially  striking,  but  every 
other  country  of  Europe  oft'ers  illustrations  of  the  truth  of  the 
paradox.  We  not  only  find  that  Italy  has  suddenly  awakened 
to  the  possibilities  of  conserxing  the  force  of  her  enoruKnis 
water-power,  and  is  beginning  a  great  movement  to  turn  into 
electrical  energy  numberless  cascades  and  rajiids,  but  an  ex- 
amination of  the  industrial  side  of  ever\-  other  nation  shows 
nuich   that   is   still   unhewn  and   unwrought.     Austria  has   just 


"COMiMKRCIAI.    INVASION"    OF    KIROI'K 


fornnilatod  a  loi^islalive  plan  for  a  s;real  iiul-work  of  caiiab 
which  will  cost  huiulrods  of  millions  of  llorins  and  revo- 
lutionize the  transporta- 
tion of  the  empire.  Ger- 
many, from  this  indus- 
trial point  of  view,  is  a 
picture  of  youth — new 
factories  on  every  hand, 
new  development  every- 
where, and  the  spirit  of 
the  industrial  pioneer  in 
all  the  ])eople.  Eng- 
land, wedded  as  she  is 
to  industrial  precedent, 
turning  instinctively 
from  methods  that 
mean  change,  holding 
close  to  the  ways  that 
were  the  ways  of  the 
fathers,  presents  a  field 
unploughed  when  looked 
at  from  the  point  of  view 

of  the  opportunity  ofTered  for  the  introduction  of  the  best  in- 
dustrial methods  and  the  most  economical  mechanical  ec|uii)ment. 
France,  with  her  satisfaction  over  her  minute  subdivision  of  own- 
ership and  her  contentment  with  small  things,  offers  virgin  fields 
for  the  exploitation  of  modern  ideas  of  specialization,  combina- 
tion, and  community  of  interests.  \'ast  Russia,  enormous  in 
extent  and  population,  is  immaturity  itself,  new  industrially 
beyond  anything  America  has  known  for  two  generations. 

When  we  see  that  Europe  is  an  industrial  field,  still  unde- 
veloped: that  in  many  directions  the  methods  and  practices 
current  in  industrial  life  are  as  wasteful  and  expensive  as  arc 
operations  in  some  new  country,  we  perceive  at  once  that  such 


Count  Agenor  Goluchowski,  Foreign  Minister 
of  Aiistria-Hiini;ary. 


38  THE    AMERICAN 

a  condition  has  two  important  relations  to  our  own  industrial  life. 
If  our  foreign  competitors  are  not  making  the  most  of  their 
opportunities,  their  time,  and  their  labor,  gauged  by  our 
standards,  it  means  that  they  are  under  a  handicap  in  com- 
petition with  our  industrial  output,  and  so  long  as  our 
methods  are  superior  to  the  methods  in  vogue  in  Europe  we 
may  look  for  continued  advantage  in  international  competition. 

The  idea  of  an  undeveloped  Europe  is  of  decided  interest 
to  us,  however,  from  another  point  of  view.  With  such  a 
field  for  development  as  we  have  had  at  home  we  have  be- 
come experts  in  seeing  new  opportunities,  and  have  become 
quick  to  disregard  precedent  and  long-established  conditions, 
and  to  perceive  the  advantages  \\hich  may  come  from  new- 
combinations,  modern  equipment,  and  specialized  work.  An 
undeveloped  Europe,  therefore,  offers  a  tield  in  which  this 
special  genius  of  ours  may  profitably  exploit  some  of  the  same 
industrial  methods  and  policies  which  have  proven  so  success- 
ful at  home.  This  is  not  a  mere  theory.  There  are  already 
notable  illustrations  of  success  in  exactly  that  sort  of  thing, 
and  there  are  promises  of  many  more  successes  to  come.  Our 
great  electrical  coni]ianics  have  established  works  in  England. 
France.  Germany,  and  Russia.  There  are  tool-works  in  Ger- 
many cc|uippcd  with  complete  sets  of  American  models.  Amer- 
ican machines,  and  Yankee  foremen.  Important  portions  of 
London  interurban  transportation  systems  have  come  into 
American  hands  and  are  feeling  the  vivifying  intluence  of 
American  ideas.  The  electric  street-railroads  and  lighting- 
plant:.,  in  a  number  of  important  cities  of  France  are  controlled 
by  American  interests,  and  the  transportation  system  of  Paris 
itselj  is  a  field  which  is  tempting  close  investigation  on  behalf 
of  American  capital. 

Some  attention  has  lieretofore  been  drawn  to  the  extraor- 
dinary balance  in  America's  favor  which  the  last  half-dozen  years 
of  foreign  trade  has   built   ui^     The  scitlcmcnt  by  Europe  of 


"COMMERCIAL    INVASION"    OF    KUROPK         39 

these  annual  trade  balances  is  a  problem  which  has  been  out- 
lined, and  attention  has  been  called  to  ihc  opinion  of  many 
European  and  not  a  tew  American  financiers  that  ullimalely 
the  settlement  of  this  trade  balance  must  be  effected  by 
America  investing  in  European  interests  and  securities.  .\  few 
years  ago  it  would  ha\c  sounded  absurd  to  have  talked  of  the 
possibility  of  American  capital  seeking  investment  in  luu'ope. 
The  idea  is  hardly  }et  so  familiar  as  to  make  it  seem  reason- 
able. It  is  hard  to  believe  that  America,  with  her  endless  op- 
portunities, unparalleled  richness  of  natural  resources,  and 
admitted  pre-eminence  in  iiulustrial  methods,  should  not  con- 
tinue for  a  long  time  to  l)e  a  more  profitable  field  for  the 
investment  of  capital  than  can  possibly  be  found  in  luiroi)e. 
For  us  the  disadvantages  of  distance,  of  foreign  laws  and  cus- 
toms, and  of  competition  with  great  funds  of  accumulated 
capital  have  heretofore  seemed  to  preclude  any  possibility  of 
our  becoming  investors  across  the  Atlantic.  But  this  annual 
trade  balance  which  we  have  been  piling  up  has  been  so  ex- 
traordinary in  itself  that  it  seems  likely  to  lead  to  other  unusual 
features;  and  among  those  it  now  seems  easily  possible  that  we 
shall  see  American  capital  become  an  important  factor  in  Eu- 
ropean fields. 

Xaturallv.  few  Americans  have  gone  to  Europe  to  look  for 
investment  opportunities.  Travellers'  descriptions  have  been 
endless,  but  few  of  them  have  told  us  of  European  conditions 
from  an  American  investor's  point  of  view.  We  have  in  times 
past  had  a  good  many  financiers  go  abroad  to  convince  Eu- 
ropean capitalists  of  the  credit  and  good  prospects  of  enter- 
prises that  we  were  developing  at  home,  but  it  is  only  wilhin 
the  last  few  months  that  Americans  have  been  going  abroad 
to  measure  investment  possibilities,  to  investigate  offerings  of 
securities,  and  to  look  into  opportunities  for  profit  in  new 
developments,  new  combinations,  and  the  application  of  new- 
methods. 


40  THE    AMERICAN 

If  a  trade  balance  of  some  hiiiKlreds  of  millions  of  dollars 
is  to  be  settled  by  our  taking  European  securities,  it  becomes 
decidedly  interesting  for  us  to  begin  to  study,  from  an  in- 
vestor's point  of  view,  the  economic  conditions  prevailing  there. 
It  is  from  such  a  point  of  view  that  1  intend  to  present  some 
of  the  points  that  appealed  to  me  as  particularly  interesting  in 
several  of  the  European  countries. 

The  countries  forming  the  Triple  Alliance — Germany.  Aus- 
tria-Hungary, and  Italy — offer  the  most  widely  divergent  in- 
dustrial conditions;  but  because  of  political  bonds  there  has 
been  a  close  relation  between  the  financial  and  commercial 
interests  of  the  three  nations,  and  an  interchange  of  capital, 
so  they  have  come  to  form  a  natural  industrial  group  as  well 
as  a  political  alliance. 

Of  all  the  European  powers  the  industrial  newness  of  Italy 
strikes  one  most  sharply.  That  is  true  both  as  to  the  actual 
lack  of  develo])mcnt.  and  from  the  fact  that  one  naturally  asso- 
ciates Roman  surroundings  with  age.  \\'e  are  inclined  to  think 
of  Italy  as  a  land  of  cathedrals  and  art-galleries,  blue  skies  and 
sunshine,  where  the  rich  go  for  ]-)leasure.  and  the  jioor  stay  to 
beg;  and  the  industrial  importance  of  the  country  is  not  a 
sul)ject  that  many  of  our  ovn  ])eoi)le  have  considered  deeply. 
While  Italy  abounds  in  glorious  history,  and  is  a  land  of  great 
memories,  it  has  in  modern  times  held  a  comparatively  small 
place  in  the  industrial  history  of  the  world.  Devel(^]iments  are 
going  on  there  now.  however.  ]\articularly  in  the  north,  which 
promise  to  luring  the  measure  of  Italy's  industrial  importance 
much  higher  u]-)  in  the  cohnnn  of  totals.  Soul  hern  Italy  is 
hopelessly  handicapjied  for  a  U^ig  time  to  come  by  the  system 
of  land-ownership,  the  hardshijis  of  taxes,  the  extreme  ]nn-erty 
of  the  peo])le,  and  their  consequent  deterioration  from  an  in- 
dustrial ])oint  of  view,  and  by  excessive  illiteracy.  The  element- 
ary and  secondary  schools  there  are  incredibly  bad:  leaching  is 
the  least  honored  of  the  learned  professions.  ConditiiMis  are 
far  better  in  the  north.     There  are  foiuid  small  individual  owner- 


"COMMERCIAL    INVASION"    OF    EUROPE 


41 


ship  of  land,  and  an  independence  and  thrift,  in  strikint;-  con- 
trast to  the  south.  The  jieople  take  more  reachiy  to  iiuhistrial 
pursuits,  too,  and  there  is 
really  striking-  progress 
in  the  recent  upbuilding 
of  many  industries. 

Prior  to  1871,  when 
Church  and  State  were 
separated,  and  the  pres- 
ent political  regime  in- 
augurated, the  industries 
of  Italy  were  compar- 
atively i  n  s  i  g  n  i  ti  c  a  11 1, 
viewed  from  the  stand- 
point of  international 
trade.  The  population 
was  largely  given  up  to 
agriculture.  In  the  thirty 
years  that  have  elapsed 
there  has  been  notable 
industrial  growth,  and 
that  growth  is  now  going 
forward  at  a  steadilv  ac- 


Koloman  von  Sz^ll,  Prime  Minister  ot  Hun- 
gary; also  Minister  of  tiie  Interior. 


.celerated  pace.  One-third  of  all  the  silk  used  in  the  world 
comes  from  Italy.  Nearly  as  great  progress  has  been  made 
in  the  weaving  and  si)inning  of  the  silk  cloth  as  in  the 
production  of  raw  silk.  In  three  years  the  exports  of  woven 
silk  have  risen  from  $65,000,000  to  $100,000,000.  Great 
progress  has  also  been  made  in  cotton-weaving.  The  in- 
dustry did  not  exist  twenty-five  years  ago.  while  now  it 
emplovs  80.000  men  and  produces  annually  an  output  valued  at 
$60,000,000. 

The  cheap  labor  of  Italy  and  its  comparative  efficiency  have 
attracted  English  manufacturers.  Two  or  three  of  the  best 
known   of   the    English   glove-makers   have    large    factories   in 


42  THE    AMERICAN 

Xai)les.  I  saw  gloves  there  being  turned  out, by  the  thousands, 
stamped  with  the  imprint  of  well-known  English  names,  and 
eompleted  by  the  addition  of  buttons  bearing  the  legend  "  iMade 
in  England  " — a  bit  of  commercial  artitice  that  must  be  con- 
fusing to  customs  officials  when  they  later  attempt  to  classify 
England's  exports.  Endless  cartons  of  beautifully  fashioned 
artificial  riowers,  believed  by  the  people  who  buy  them  to  have 
been  created  by  the  deft  touch  of  Parisian  fingers,  are  likewise 
made  in  Naples,  antl  later  have  loo  per  cent,  or  more  added 
to  their  value  by  having  French  names  pasted  on  the  boxes. 

The  industrial  development  of  Italy  has  two  distressing 
im})ediments.  One  is  the  high  rate  of  taxes,  the  other  the 
high  cost  of  fuel.  In  army-ridden  Europe  there  is  no  other 
country  where  the  per  capita  cost  of  maintaining  the  military 
establishment  is  so  great  as  it  is  in  Italy,  and  no  other  country 
where  the  people  are  so  little  able  to  aft"ord  the  glories  of 
armies  in  the  field  and  of  fleets  at  sea.  Italy  as  a  nation  is  out 
of  her  rank  in  attempting  to  maintain  a  first-class  war  footing, 
and,  until  her  military  expenditures  are  reduced  to  a  point 
commensurate  with  her  i)opulation  and  wealth  the  military  bur- 
den will  be  an  almost  insurmountable  obstacle  to  the  desire 
of  her  commercial  citizens  to  have  the  country  take  foremost 
rank  as  a  producing  nation. 

A  hinderance  to  industrial  growth,  second  in  importance  to 
that  of  the  demand  of  the  war-chests,  is  the  lack  of  coal.  All 
the  coal  used  on  the  railroads  and  in  the  factories  is  shipped 
from  other  countries,  and  Italy's  trade  balance  is  reduced  each 
year  by  the  full  amount  of  her  fuel  l)ill.  This  not  onl\-  has  a 
most  unfavorable  effect  on  her  balance  df  trade,  but  it  means 
that  the  cost  of  fuel  in  Italy  is  very  nuicli  higher  than  is  the 
cost  in  any  of  the  countries  with  which  she  must  compete  in- 
dustrially. At  Italian  seaports  the  ]M-ice  of  coal  ranges  from 
«$7  to  $io  a  ton.  In  Alilan  luanufacturers  pay  $12  a  ton  for 
coal  for  which  German  manufacturers  pay  SC).  which  the  Eng- 
lish manufacturer  can  get  for  $4,  and  which  is  laid  down  at 


"COMMERCIAL    INVASION"    OF    KTROPK         43 

many  factories  in  the  United  States  at  $2.50  a  ton.  There  is 
only  one  locality  in  the  kini^cloni  where  coal  is  mined,  and  the 
output  is  small  and  the  (luality  pour. 

There  seems  to  be  more  prospect  ahead  for  Italian  indus- 
tries being  relieved  from  the  burden  of  high  fuel  charges  than 
from  the  weight  of  excessive  military  taxes.  Italy  abounds  in 
water-power,  and  there  is  just  now  a  great  awakening  in  regard 
to  the  development  of  that  latent  energy.  Manufacturers  are 
coming  to  understand  that  future  development  will  most  likely 
be  reached  along  lines  of  securing  power  at  low  cost.  Italy 
is  remarkably  favored  with  water-power.  To  the  north  are 
the  Alps,  and  the  Apennines  run  far  south  along  the  centre  of 
the  Peninsula.  The  country  is  an  immense  water-shed,  down 
which  innumerable  streams  flow,  none  of  them  very  large,  but 
all  falling  a  great  distance,  and  developing  in  their  descent  a 
prodigious  amount  of  power.  Engineers  who  have  made  a 
study  of  the  situation  estimate  that  the  rivers  of  Italy  can  be 
made  to  furnish  more  than  2,500,000  horse-power,  which  has 
a  value  equivalent  to  coal  now  costing  $125,000,000.  More 
than  1,000  companies  have  been  organized  in  the  last  few  years 
to  erect  power  plants  along  these  streams. 

Italy  is  lacking  in  any  large  fund  of  capital  available  for 
aiding  her  industrial  development.  Investment  in  stock  com- 
panies has  not  yet  become  popular.  The  Italian  is  extremely 
distrustful  in  finance;  his  distrust  has  a  fundamental  basis  in  a 
fear  even  of  banks  and  bank  accounts.  He  wants  to  keep  his 
property  out  of  the  sight  of  a  tax-gatherer,  and  he  does  not 
put  great  dependence  in  the  commercial  signature  of  his  fel- 
low. The  use  of  bank-checks  in  current  daily  business  is 
almost  unknown.  There  are  large  savings-bank  deposits,  but 
the  people  have  not  reached  a  point  in  commercial  develop- 
ment where  they  will  give  their  capital  an  effective  aggregate 
by  investment  in  corporate  securities.  Before  Italy  cut  loose 
from  France  and  joined  her  political  fortunes  with  .Austria  and 
Germanv.    French  capital  ha<l  U.nko<l  with  favor  uix.n   Italian 


44  THE    AMERICAN 

enterprises.  Alter  the  political  changes  of  18S7,  the  Italian 
exports  to  France  dropped  from  $81,000,000  to  $34,000,000, 
and  have  continued  at  about  the  lower  figure,  and  French 
capital  ceased  to  How  into  Italian  investments.  That  has  in  a 
measure  been  compensated  for  by  the  interest  that  German 
capital  has  taken  in  financial  operations,  but  Germany's  own 
industrial  development  went  on  so  rapidly  and  has  now  come 
to  so  many  misfortunes  that  the  present  offering  of  German 
capital  is  much  restricted. 

Italy  would  look  with  great  favor  upon  any  project  to  in- 
terest American  capitalists  in  her  industrial  development,  and 
undoubtedly  a  field  is  there  offered  which  will  1)ear  some  in- 
spection at  the  hands  of  our  financiers.  In  certain  lines  there 
is  no  possibility  of  Italy  successfully  competing  with  the  United 
States,  England,  and  Germany.  The  lack  of  coal  will  leave 
the  country  out  of  the  race  in  iron  and  steel  manufactures. 
In  those  lines  of  industry,  however,  where  chea]5  labor  is  re- 
quired, and  where  the  cost  of  raw  material  is  favorable,  there 
])romises  to  be  much  success.  The  labor  is  skilful  and  effective, 
and  manufacturers  are  not  slow  in  accepting  mechanical  ini- 
l)rovements  and  adopting  modern  methods.  The  fact  that  the 
country  is  not  on  a  gold  basis  is  a  drawback.  Italian  financiers 
are  anxious  to  establish  the  gold  standard.  The  Finance  Min- 
ister, Signor  Chimirri,  told  me  that  he  had  strong  hopes  of 
success  in  tb.at  direction.  It  is  recognized  that  the  present 
uncertainty  regarding  the  value  of  the  Italian  money  standard 
acts  as  a  serious  deterrent  to  the  investment  of  foreign  capital 
in  the  country.  An  excessive  issue  of  bank-notes,  a  sur\ival 
of  former  days,  is  the  main  reason  for  the  depreciation  of  the 
currencv.  but  the  Government  now  has  a  definite  progranmie 
for  reducing  the  l)ank-note  circulation  by  a  fixed  amount  each 
year.  Tolitical  conditions  are  in  many  respects  most  unsatis- 
factory. In  many  sections  there  is  distressing  poverty;  and 
the  high  price  for  food,  made  necessary  by  heavy  taxation, 
brings  dire  hardships  into  the  lives  of  the  common  people.     It 


"COMMERCIAL    INVASION"    OF    IIROIM'. 


45 


Landeibank,  Vienna. 


has  been  estinialod  thai  the  a\ora^\'  Italian  laliorcr  has  310 
ponnds  of  cereal  foixl  ilnrin^-  the  war.  which  is  iwenly-live 
per  cent,  less  than  is  L;iven  the  inmate  of  an  |-".n,ulish  work- 
house. Sociahsm  is  rampant, 
and  the  Government  must  he 
constantly  on  the  alert  to  pre- 
vent uprisinj;-.  jntl,i;ini;-  hy  the 
precautions  taken,  there  are 
sections  of  the  country  at  all 
times  on  the  iXMnt  of  an  out- 
break against  constituted  au- 
thority, inspired  by  no  very 
definite  political  reasons  and 
due  more  to  tlie  desperation  of 
hunger  than  to  ideas  in  politi- 
cal opposition  to  the  Govern- 
ment. The  people  are  under 
the    domination    of    an    army 

which  takes  not  only  the  best  blood  of  the  country,  but  im- 
poses an  almost  unbearable  weight  of  taxation  on  those  left  to 
carry  the  burden.  The  army  and  na\y  alone  absorl)  six  per 
cent,  of  the  country's  income;  or  in  other  words,  out  of  every 
$100  earned  in  Italy,  $6  is  taken  by  the  Government  in  sup- 
port of  the  military  establishment. 

The  social  and  political  unrest,  the  burdens  of  taxation, 
and  the  uncertain  money  standard  nuist  cause  foreign  capital 
to  hesitate  even  before  opportunities  that  may -look  alhn-ing. 
while  those  same  impediments,  together  with  a  kick  of  some 
of  the  most  essential  raw  materials  and  of  home  capital,  nnist 
make  the  further  industrial  development  of  the  coiuitry  slow 
when  measured  by  our  standards.  The  United  States  has  no 
need  to  fear  Italian  competition  in  the  world's  markets  in  any 
of  the  great  staples  of  our  manufactures.  There  is.  however, 
easy  possibility  of  greatly  increasing  our  sales  to  Italy,  par- 
ticularlv  if  her  industrial  dcvelojMuent  goes  forward  along  Imes 


r 


4b  THE    AMERICAN 

which  permit  her  to  sell  to  us  some  commodities  which  we  can 
better  buy  than  i)rocluce. 

In  the  closing  days  of  his  public  career  Prince  Bismarck 
found  occasion  to  say,  "  Poor  Austria,  I  fear  her  days  are 
numbered."  Let  us  hope  the  Chancellor  did  not  speak  pro- 
phetically, but  he  certainly  spoke  with  profound  perception  of 
the  cross-drifts  which  are  the  despair  of  the  statesmen  of  Austria- 
Hungary.  One  of  the  most  restive,  bewildering,  and  bewildered 
state-unions  in  existence  is  the  Dual  ^Monarchy,  a  country  at 
once  one  and  divided,  a  people  ready  to  overturn  their  govern- 
ment for  a  language  preference,  a  country  of  twenty  tongues, 
each  one  berating  the  other,  a  country  the  one-half  of  which 
puts  trade  barriers  in  the  way  of  the  other  half:  Hungary  jeal- 
ous of  Austria,  and  Austria  unable  to  forgive  Hungary  its 
superior  prosperity.  The  monarchy  is  made  up  of  conglom- 
erate peoples,  unable  to  act  and  think  together,  and  habitually 
threatening  to  act  and  think  apart.  In  no  other  country  of 
Europe  are  industrial  conditions  so  complicated  by  politics, 
hereditary  jealousies,  class  distinctions,  church  influences,  and 
a  babel  of  tongues  that  cannot  be  harmonized  either  in  speech 
or  sentiments.  For  the  present  the  personality  of  the  vener- 
able Franz  Joseph  holds  together  these  varied  elements.  What 
will  come  to  the  Dual  Monarchy  after  Franz  Joseph  is  a  ques- 
tion never  out  of  the  mind  of  any  European  statesman. 

It  is  in  the  midst  of  this  political  turmoil  that  the  idea  was 
born  for  a  European  tariff  alliance  against  America.  It  is  here 
that  one  finds  the  keenest  antagonism  toward  commercial 
America,  and  the  most  earnest  efforts  to  block  by  legislation 
a  commercial  invasion  that  could  not  be  met  by  methods  of 
superior  industrial  merit. 

The  president  of  the  Chanil)er  of  Commerce  at  Vienna  ex- 
plained to  me  the  Austrian  position  on  this  matter  of  tariff 
discrimination  against  the  United  States.  "  America  is  destined. 
beyond   question,   to   be  a  most   powerful   country."   said   he. 


COMMERCIAL    INVASION"    OK    KIROPK 


47 


*'  \\'e  regard  it  as  ilic  most  dangerous  conii)etit()r  in  all  our 
markets.  The  marrow  and  bone  of  her  jM-ospcriiy  we  l»clie\e  to 
be  her  protective  taritt.  which  has  enabled  her  lo  build  up  her 
industries  and  develop  her  resources.  The  Sieel  Trust  shows 
us  what  we  have  to  expect  in  the  huuro.  We  shall  have  to 
atlopt  the  same  policy,  and  we  will  do  it.  Whenever  we  dis- 
cover that  American  competition  is  hurting  any  of  our  indus- 
tries, we  shall  certainly  shut  out  America  if  we  can.  if  we  do 
not  succeed  in  making  a  satisfactory  treaty  with  the  United 
States,  we  shall  look  to  Russia  and  Australia  for  the  raw 
materials  we  may  need,  for  to  those  countries  we  shall  be  able 
to  sell  the  products  of  our  industry." 

These  words  must  not  be  ci>nsidered  as  the  expression  of 
a  private  citizen,  but  as  having  oflicial  character,  for  the  Cham- 
ber of  Commerce  is  an  of^cial  advisory  institution  for  the  aid 
of  the  government  in  the  preparation  of  legislation.  The  best 
judgment  in  Europe  and  America  is,  I  believe,  pretty  well 
agreed  on  the  futility  of  a  European  tariff  alliance  against  the 
United  States.  Not  one  of  our  ambassadors  or  ministers  be- 
lieves it  is  a  feasible  programme  for  the  European  States,  no 
matter  how  antagonistic  European  statesmen  may  become 
toward  us  on  account  of  our  commercial  success  in  foreign 
fields.  I  found  no  important  banker  or  manufacturer  who 
thought  it  probable  that  the  contacting  interests  of  the  various 
States  could  be  brought  to  any  harmonious  point  of  view  from 
which  to  formulate  such  a  tarilT.  Undoubtedly  it  is  a  dream 
in  the  minds  of  many  people  who  have  not  .a  clear  idea  of 
the  difficulties  involved,  but  certainly  the  best  ju<lgment  of  the 
two  continents  seems  against  the  feasibility  of  the  idea.  Con- 
flicting interests  can  never  be  harmonized  so  that  an  agree- 
ment will  be  reached  among  the  nations.  Indeed,  conllicting 
interests  in  the  Dual  Monarchy  itself  can  probably  never  1)C 
harmonized  so  as  to  support  Count  Goluchowski's  programme. 
Austria  is  a  manufacturing  country.  Her  people  have  highly 
developed  artistic  faculties,  and  a  deftness  and  skill  which  make 


48 


THE    AMERICAN 


her  a  leader  in  certain  of  the  finer  Hnes  of  prockiction,  and  she 
has  some  standing  as  a  producer  of  iron,  steel,  and  machinery. 
Hungary,  on  the  other  hand,  is  as  yet  almost  altogether  an 
agricultural  country.    Austria  wants  high  taritl  and  cheap  food; 


The  Treasury  Biuki 


Vkm 


Hungary  would  like  to  exclude  foreign  food  and  have  the  ad- 
vantage of  cheap  foreign  manufactures.  The  two  parts  of  the 
monarchy  are  held  together  by  a  slender  thread,  and  the  fretful 
people  that  compose  the  two  nations  will  only  agree  that  that 
bond  may  hold  them  for  ten  years  at  a  time.  The  Ausgleigh 
expired  in  1897.  and  for  four  years  the  two  States  have  wran- 
gled over  its  renewal,  industry  and  conmierce  being  all  that 
time  greatly  perturbed. 

If  we  look  at  Austria  as  a  competitor  for  the  world's  trade, 
it  is  easy  to  see  that  there  is  small  occasion  for  us  to  be 
alarmed.  The  obstacle  which  ])olitical  conditions  set  up  in  the 
way  of  industrial  progress  are  almost  insurnunrntablc.  Every- 
where in  Europe  there  is  found  a  weight  of  taxes  bearing  on 
industry  much  greater  than  with  us.  In  Austria  this  is  notably 
so.  A  Viennese  engineer  who  builds  iron  bridges  on  a  large 
scale  told  me  something  of  the  dif^culties  an  Austrian  manu- 
facturer has  to  face  as  a  result  of  the  visits  of  the  tax-gatherer : 


"COMMKRCIAL    INVASION"    OF    KIROPK  49 

"  In  calculating"  the  cost  of  a  piece  of  work."  he  said.  "  there 
are  three  important  elements:  the  CDSt  of  the  material,  the  cost 
of  labor,  antl  the  alUnvance  for  laxalinn.  (  )ur  tax  laws  are 
somewhat  complicated,  but  1  have  found  thai  an  api)rn\inia- 
tion,  which  is  close,  will  amount  to  sixty  per  cent,  of  the  labor 
cost,  which  we  must  add  for  taxes." 

If  manufacturers  in  this  country  were  obliged  to  ad<l  to  the 
cost  of  their  products  sixty  per  cent,  of  what  they  pay  for  the 
labor  that  enters  into  them  as  a  contribution  to  federal  taxa- 
tion, our  success  in  the  world's  competition  would  be  slow. 

In  \'ienna  I  met  an  American  who  is  at  the  head  of  <>ne 
of  the  large  boiler-works  in  this  country.  He  had  been  inter- 
ested in  making  comparisons  of  the  cost  of  lalK)r  and  of  the 


The  Bourse,  Vienna. 


methods  of  work  in  the  Viennese  factories,  an.l  1  fonn.l  htm 
amazed  at  the  wasteful  methods  and  the  high  labor-co>t  ih.it 
resulted  from  the  Austrian  manufacturers  failing  to  use  mod- 
ern machinery. 

"I  was  informed  in  one  sho]),"  he  t<.Id  me.  "that  a  boiler 
of  about    150   horse-power  cost   for   labor  alone  $75<J-      ^^^^^ 


50 


THE    AMERICAN 


boiler  would  have  been  built  in  an  up-to-date  shop  in  America 
for  a  labor  cost  of  $150.  In  the  United  States  three  work- 
men with  modern  tools  would  accomplish  as  much  in  one  day 
as  would  be  done  by  four  workmen  in  a  \'ienna  shop  working- 
one  week.  The  cost  of  the  labor  in  the  United  States  would 
be  about  $5,  the  men  receiving  for  this  class  of  rough  work  a 
little  more  than  $1.50  a  day.  Of  the  four  men  in  the  \'ienna 
shop,  two  would  receive  eighty  cents  a  day,  one  sixty  cents, 
and  one  forty  cents,  but  even  at  those  low  wages  the  total 
labor  cost  there  would  be  $15.60  against  about  $5  with  us. 
I  found  an  almost  total  absence  of  labor-saving  machinery  in 
some  of  the  largest  shops  in  A'ienna — plates  were  being  han- 
dled by  hand;  there  were  no  riveting  machines,  no  travelling 
cranes,  or  modern  hoists." 

I  asked  a  large  manufacturer  in  Vienna  why  he  did  not 
introduce  modern  labor-saving  machinery.  He  had  been  in 
American  shops  and  was  fairly  well  posted  on  what  was  pos- 
sible in  the 'way  of  reducing  the  amount  of  labor  entering  into 
his  product.     His  line  of  reasoning  was  interesting: 

"  You  will  not  find  the  latest  labor-saving  machinery  here." 
he  said,  '*  because  labor  is  so  cheap  that  it  does  not  pay  to 
have  the  best  machinery  as  it  docs  with  you.  If  we  invest 
monev  in  labor-saving  machinery,  the  interest  on  the  cost  of 
that  investment  goes  on  every  day  in  the  year,  and  every  suc- 
ceeding year,  whether  times  are  good  or  bad  and  orders  many 
or  few.  With  our  cheap  labor  it  is  different.  When  we  have 
a  rush  of  work  we  can  employ  more  men:  in  slack  seasons  we 
can  discharge  them.  The  trouble  with  labor-saving  machinery 
is  that  you  cannot  discharge  it  when  you  have  no  work  for  it 
to  do." 

Labor  waste  is  not  confined  to  industrial  life,  by  any  means. 
Austria  furnishes  endless  illustration  of  a  situation  which  is 
found  in  about  all  the  European  countries,  but  which  is  in  its 
highest  development  in  Italy,  Austria,  and  Russia.  In  those 
countries  the  greatest  ingenuity  has  been  exercised  in  devising 


"COMMERCIAL    INVASION"    OF    KLROPK         51 

positions  where  the  service  peri'ornied  is  useless.  Everywhere 
flunkeys  stand  ready  to  perform  unnecessary  services  for  one. 
You  are  not  j^iven  an  oi)i)t)ruunty  even  to  open  the  door — a 
retainer  ahvays  stands  reaily  to  do  it  for  you.  and  then  hold 
out  his  hand.  If  you  call  at  a  hank  or  puhlic  oflice.  the  con- 
cierge opens  the  (.loor  witli  <;reat  ol)se(|uiousness  ati<l  hands  you 
over  to  a  guide,  who  shows  you  to  the  door  of  the  room 
sought,  where  a  flunkey  takes  your  hat  and  coat,  another  vour 


.'ui.-.M.ui  W'.men  SYw'xni:.  ^\'<r\^r. 

card,  and  still  another  ushers  you  in.  On  leaving,  it  is  advis- 
able to  remember  all  these  hard-working  citizens'with  a  pittance 
if  you  intend  to  make  another  visit  and  desire  easy  access.  All 
this  is  typical  of  the  way  labor  is  wasted  in  the  greater  part  of 
the  Continent  of  Europe.  The  thing  seems  to  be  done  on 
principle,  and  to  be  generally  api)roved  on  the  groun.l  that  that 
system  is  best  which  keei)s  the  most  i)eople  employed.  Any 
man  who  can  create  two  jobs  where  there  was  only  .nie  job  be- 
fore, appears  to  be  regarded  as  a  public  benefactor.  The  street- 
sprinkling  carts  in  \'ienna  make  a  good  illustration.     A   hose 


52  AMERICAN 

about  six  feet  long  is  attached  to  the  rear  of  the  cart,  and  a 
rope  about  ten  feet  long  is  tied  to  the  end  of  the  hose.  One 
man  drives  the  cart  while  another  walks  behind  holding  the 
rope  and  swinging  the  hose  from  side  to  side.  If  an  Ameri- 
can should  try  to  introduce  sj^rinkling-carts  that  can  l)e  oj:)er- 
ated  by  the  driver,  he  would  certainly  be  unpopular.  '"  Why 
rob  a  poor  man  of  his  jol)?  There  is  not  enough  work  now 
to  go  round,  and  labor  is  cheap.  It's  a  small  matter.  These 
people  are  not  able  to  do  anything  else;  they  have  no  trade, 
and  if  you  introduce  a  device  which  renders  their  help  unnec- 
essary you  simply  force  them  to  starve  and  become  a  burden 
upon  the  State."  That  is  the  kind  of  Chinese  economics  which 
I  heard  from  educated  men  in  various  cities  on  the  Continent. 
It  did  not  seem  to  occur  to  them  that  work  makes  work;  that 
the  amount  of  work  which  the  world  wants  done  and  is  ready 
to  pay  for  is  capable  of  indefinite  increase,  or  that  habits  of 
slothful  and  imnecessar}-  work  must  breed  a  ])eople  incapable 
of  energy  and  enterprise.  It  takes  two  men  to  handle  a  plough 
in  Europe,  not  because  one  man  really  cannot  do  it  alone, 
but  because  public  sentiment  approves  the  employment  of  an 
extra  man  wherever  the  slightest  excuse  can  be  found  for 
him. 

It  needs  only  the  period  covered  by  the  memory  of  a  man 
still  young  to  make  the  comparison  which  will  show  that  the 
industrial  life  of  Germany  is  in  its  beginnings.  The  picture  of 
Germany  twenty-five  years  ago,  contrasted  \\ith  the  industrial 
Germany  of  to-day,  shows  a  genius  for  work,  a  determination 
for  development,  and  a  rapidity  of  ]M-ogress  which  can  be 
matched  nowhere  in  the  world,  unless  it  is  in  the  United  Slates. 
The  Germany  of  thirty-five  years  ago  bore  almost  as  little  re- 
lation to  the  Germany  of  to-day  as  did  some  portions  of  the 
United  States  to  our  present  condition. 

A  great  i)lain  covering  the  entire  north  and  east  of  the 
country  where  small  crops  were  grown  at  high  cost  and  with 
great  lal)or;  a  table-land  in  the  south  almost  as  barren;  a  few 


COMMERCIAL    INVASION"    OF    KCROl'i; 


5S 


seaports,  in  luily  two  v>t'  which  was  there  entrance  for  vessels 
of  the  deepest  (h'auj^ht:  a  larj^e  system  ol  slmllow  rivers;  fertile 
valle\s  in  the  south  and  wc^t.  but  cnxcrini;  nut  oxer  mic-tenth 
of  the  area  of  the  country;  large  ilept>sits  of  low-grade  iron 
ore;  a  coal  area  limited  in  extent  with  deejjdying  seams  from 
which  came  a  product  of  poor  quality;  small  deposits  of  cop- 


The  Bank  of  Italy,  Koine. 


per,  lead,  and  zinc;  a  large  forest  in  the  smith;  a  small  com- 
merce; a  manufacturing  industry  hardly  worthy  of  the  name;  a 
disordered  currency,  a  disorgani7,ed  hanking  system,  a  deranged 
financial  system,  a  confused  foreign  policy;  a  people  divided 
into  twenty-three  States  with  only  the  tie  of  a  common  customs 
union,  the  coercion  of  the  I'russian  hegemony,  and  a  common 
language  and  literature— such  were  the  materials  of  thirty  live 


54 


THK    AMERICAN 


years   ago,    out   of   which    modern    Germany   was   to    he    con- 
structed. 

A  popuhuion  numl)crinj;-  5^). 000,000.  hrmly  united  into  a 
great  national  state;  a  system  of  internal  connnunicaticMi  the 
second  largest  in  the  world;  a  foreign  commerce  inferior  only 
to  that  of  England  and  the  United  States,  wliich  has  reached 
out  to  the  uttermost  i)arts  of  the  world  in  its  conciuest  of  mar- 
kets, and  has  won  its  place  in  the  face  of  long-standing  com- 
mercial connections:  a  system  of  industry  which  has  utilized  to 
the  full  every  resource  the  nation  jiossessed,  which  has  l)rought 
the  Avaste  places  under  culti\ation.  and  by  careful  methods  of 
scientific  agricultiu-e  has  dexeloped  the  }ield  of  the  soil  more 
than  threefold,  creating-  dc  mnv  the  beet-suqar  industry;  a  system 


An  American  Cash^r^fister  m  Austria 


which  has  (|uadrupk'd  the  i)roduction  of  coal  and  tripled  the  pro- 
duction of  iron;  which  has  developed  the  greatest  chemical  trade. 
the  second  largest  electrical  industries,  the  third  textile,  iron,  and 


"COMMKRCIAF.    INVASION"   OK    KIROPK 


55 


steel  industries,  and  the  second  shippini;  system  of  the  whole 
ivorld:  Avhich  has  tripled  the  city  population,  reduced  a  hnj^e  and 


Interior  of  an  Electric  Manufactory  in  Germany.    The  Maciiines  in  the  F-.reuround 
were  Made  in  America. 

threatening  emigration  to  insigniticant  i)roportions.  raised  wages, 
increased  the  value  of  land,  and  tripled  the  revenues  of  the  State; 
a  strong,  self-reliant,  progressive,  prosperous  nation— such  is 
modern  Germany,  the  result  of  thirty  years  of  nati(Mi-l)uilding. 
Never  before  in  the  industrial  history  of  the  world,  unless 
we  except  the  victory  of  the  same  race  in  the  Low  Coinitries 


56  THE    AMERICAN 

over  the  waves  and  tides  of  tlie  German  Ocean,  has  such  suc- 
cess been  achieved  against  such  heavy  odds.  England  has 
succeeded,  but  England  was  never  cursed  by  invasion  and  civil 
war.  luigiand's  soil  is  fertile.  Her  coasts  are  indented  with 
fine  harbors.  Her  security  made  her  the  home  of  the  great 
inventions,  and  those  inventions  gave  her  the  commerce  of  the 
world  for  more  than  three-quarters  of  the  nineteenth  century. 
The  United  States  has  succeeded,  but  the  United  States  was 
blessed  with  the  richest  heritage  of  natural  wealth  that  ever  fell 
to  the  lot  of  any  people.  Planted  in  the  midst  of  a  continent, 
with  a  soil  of  extraordinary  richness;  with  the  coal  seams  lying- 
open  on  the  river-banks,  and  iron  only  needed  to  be  quarried 
from  the  surface;  with  river  systems  penetrating  every  part  of 
the  country,  and  a  chain  of  lakes  to  supplement  the  rivers; 
with  great  harbors  to  receive  and  send  out  foreign  trade,  and 
with  the  hungrv  multitudes  of  Europe  in  sore  need  of  our  sur- 
plus— with  all  these  natural  adxantages,  and  with  only  one 
serious  catastrophe  to  our  national  development  fc^r  eighty 
years,  it  is  no  wonder  we  have  succeeded. 

Germanv  had  none  of  these  advantages.  Germany  must 
needs  dredge  her  seajiorts,  deepen  her  rivers,  su])])ly  her  defi- 
ciencies in  raw  material  by  im]M:^rtation,  import  the  machinery 
for  her  factories,  and  the  technical  skill  to  direct  the  machinery; 
build  a  railroad  system  to  carry  her  manufactured  goods  long 
distances  to  the  sea-coast;  and  when  she  has  done  all  this  nuist 
fight  her  wav  into  markets  which  I'.ngland  and  h'rance  had 
long  since  occujiied.  1'o  do  all  this  while  guarding  against 
invasion  on  both  frontiers,  and  bearing  a  heavy  burden  of  tax- 
ation and  military  service,  to  succeed  with  no  other  aids  than 
those  of  the  national  genius  for  hard  work  and  the  national 
ambition  for  a  great  and  commanding  place  among  nations, 
and  to  win  such  success  in  the  face  of  such  difficulties  is  an 
achievement  before  which  both  England  and  America  should 
uncover  in  adnu'ration  ami  sm-prise.  If  the  measm-e  of  sticcess 
which    a    nation    acliie\es    o\-er    ad\ersc    cii'cumslances    is    the 


"COMMERCIAL    INVASION"    OF    KrR()IM%  57 

test  of  greatness,  then   (lernian)    is  the  greatest   nation  in  the 
world. 

I  reached  Germany  fresh  from  a  stndy  of  most  of  the  otlier 
Continental  eonntries.     In  none  of  them  had  1  fonnd  an\  thing 


Endless  Ch.im  II  ■.!  1 


to  lessen  the  conviction  \\ith  which  every  American  goes  ahrcxid. 
that  his  own  conntry  is  sni)crior  in  every  respect  t.>  all  other 
nations.  Most  of  those  nations  are  in  one  resi)ect  or  another 
unmodern  and  unprogressive.  They  are  snccecding  slowly,  and 
in  few  of  the  eonntries  are  the  whole  i)eople  imited  in  an  effort 


58  THE    AMERICAN 

to  achieve  success.  Their  industrial  regeneration  is  only  just 
beginning:  the  United  States  has  little  to  learn  from  them. 

But  in  Germany  we  find  not  only  a  state  with  apparently 
a  great  future,  but  a  state  which  has  begun  to  realize  that  future 
in  a  thoroughly  modern  way.  The  system  of  education,  ele- 
mentary, secondary  and  university,  certainl}-  rivals,  and  is  prob- 
ably superior  to  our  own.  It  is  a  system  which  leaves  less  than 
three  per  cent,  of  the  population  illiterate,  and  sifts  out  the 
brightest  minds  and  trains  them  for  the  service  of  the  State. 
The  State  in  turn  is  eager  and  anxious  to  avail  itself  of  the 
services  of  men  who  have  won  intellectual  distinction.  There  is 
a  system  of  commercial  education  whose  founders  realized  that 
successfully  to  deal  with  foreigners  requires  a  speaking  and 
writing  knowledge  of  their  language.  There  is  a  national  and 
municipal  administration  which  in  their  effectiveness  and  abso- 
lute integrity  must  bring  shame  to  the  resident  of  almost  any 
American  city  when  he  compares  them  with  conditions  sur- 
rounding him  at  home.  The  Government  has  encouraged 
commerce  and  foreign  trade  with  great  intelligence.  It  has 
established  the  gold  standard  and  so  organized  the  Reichsbank, 
that  the  mechanism  of  exchange  has  the  foundation  of  secure 
confidence.  It  has  aided  in  the  establishment  of  German  banks 
abroad,  and  placed  German  traders  in  the  position  of  distinct 
advantage  in  pushing  their  commercial  conquests.  A  trained 
consular  service  has  been  developed,  composed  of  men  who 
speak  the  language  of  the  country  to  which  they  are  sent,  and 
who  use  the  language  to  find  out  whatever  may  be  of  service  to 
the  German  exporter. 

The  Government  has  pursued  a  consistent  policy  in  its 
trade  relations  and  commercial  treaties,  which  has  all  along 
been  wisely  adapted  to  the  needs  of  the  national  economy. 
While  the  industries  were  getting  a  foothold,  they  were  pro- 
tected by  high  duties.  \\'hen  their  development  had  reached 
the  stage  of  independence,  and  when  their  chief  need  was  new 
markets,    the    government    made   concessions    to    neighboring 


"COMMKRCIAI.    INVASION"    OF    KIROPK 


59 


States  ill  the  customs  tariff,  and.  by  a  series  of  treaties  com- 
])lete(l  in  1893.  admitted  raw  materials  at  low  dnties  in  return 
for  similar  privileges  conceded  to  (iernian  manufactured  ex- 
ports. The  Government  early  saw  that  private  railway  man- 
agement in  Germany  was  unfavorable  to  the  export  trade,  be- 
cause it  had  not  learned  the  lesson  of  scientific  rate-making, 
which  we  in  the  United  States  ha\e  only  in  recent  \  ears  mas- 
tered.     rercei\ing"    this    fact,    the    German    ( ioxernment    took 


"^. 


An  American  Sewint;  Machine  in  Belgium. 


most  of  the  private  lines,  and  adde<l  to  them  until,  in  iQOi. 
out  of  30.777  miles  of  railway  more  than  27.000  belonged  tc) 
the  State.  In  full  control  of  the  railway  system,  the  State  ad- 
ministration has  worked  out.  x'ery  successfullw  the  basic  prin- 
ciples of  rate-making,  to  increase  the  rates  with  the  value  of 
the  freight.  It  has  granted  low  rates  on  iron  and  coal,  to  which 
concessions  the  iron  and  steel  industry  of  Westphalia  owes  in 
large  measure  its  prosperity.  The  German  Government  als«-) 
has  not  hesitated  to  use  the  bounty  system  to  build  up  the 
national  industries.     The  beet-sugar  industrv  owes  its  existence 


6o  THE    AMERICAN 

quite  as  much  to  the  aid  of  the  State  as  to  the  painstaking  care 
of  the  owner  and  scientist,  and  in  a  single  year  the  exports 
of  sugar  and  gkicose  to  Great  Britain  from  Germany  have 
amounted  to  more  than  $50,000,000.  The  German  merchant 
marine  has  been  intelHgently  assisted  by  Hberal  subsidies. 
I  found  among  business  men  a  quite  general  agreement  as  to 
the  great  benefits  which  industry  and  commerce  had  derived 
from  subsidies. 

1  asked  ]\Ir.  Louis  J.  Alagee.  who  might  be  called  an 
American-German,  since  he  was  born  and  educated  in  this 
country,  but  has  spent  twelve  years  in  Germany  as  the  manag- 
ing director  of  the  Union  Electrical  Gesellschaft.  what  in  his 
opinion  were  the  relative  advantages  of  Germany  and  America. 
His  reply  is  suggestive :  "  ^losi  Americans  are  mistaken  when 
they  imagine  that  America  is  much  ahead  of  Germany  in  man- 
ufacturing. It  is  six  of  one  and  half  a  dozen  of  the  other.  In 
some  lines  the  United  States  has  the  advantage  and  is  sending 
in  goods  to  Germany.  This  is  true  of  type-writers,  bicycles, 
and  of  some  other  other  specialties  requiring  interchangeable 
parts.  It  is  hardly  true  that  Germany  cannot  make  these  things 
as  well  as  America,  but  rather  that  it  is  more  convenient  and 
cheaper  for  Germany  to  buy  them  of  America  than  make  them. 
Our  company,  for  instance,  might  make  much  of  the  machinery 
that  we  use,  but  it  has  relations  with  the  parent  company  in 
America,  and  so  buys  the  things  from  America.  It  should  be 
noted  also  that  Germany  excels  in  some  specialties;  for  ex- 
ample, the  Mauser  rifle.  It  is  the  best  in  the  world,  and  Ger- 
many is  exporting  it  to  all  countries.  In  the  same  way  your 
laboratories  import  certain  chemicals  and  certain  instruments 
from  Germany,  not  because  America  cannot  make  them,  but 
because  they  are  cheaply  made  in  Germany  and  that  is  the 
best  place  to  get  them.  Americans  make  a  great  mistake  in 
supposing  that  Germany  is  not  up  to  date.  Every  German 
manufacturer  knows  exactly  what  is  being  done  in  his  line  in 
the  United  States,  and  knows  what  kind  of  machinery  is  being 


COMMERCIAL    INVASION"    OF    KIROPK 


(>i 


used.  If  lie  ilocs  lu.l  use  it  himself  lie  has  a  reason  that  is  sal- 
isfaetorv  to  him.  The  Germans  are  more  conservative  than 
the  Americans. 

"  This  fact  can  be  ilhistratccl,  i)erhai)S.  by  the  antomobile 
cab  system.  A  superficial  observer,  knowini;-  that  these  cabs 
were  in  use  in  American  cities,  would  draw  the  conclusion  that 


W.  R.  Koch.  Director  of  the  Gjrin.ui  InipLMi.il  auik. 


Germany  was  not  so  progressive  as  America.  But  if  he  hap- 
pened to  know  that  the  companies  in  Boston  and  Chicaj^o  ha.l 
been  financially  unsuccessful,  his  conclusion  mio;ht  not  be  .so 
unfavorable  to  the  German.  The  German  has  considered  the 
advantages  of  the  electric  cab  very  carefully,  and  has  not  in- 
troduced them  in  the  German  cities  simply  because  he  has 
decided  that  they  would  not  pay." 

Somewhat  along  this  line  Mr.  Magee  spoke  of  the  Ger- 
man.s'  ability  in  the  field  of  science,  and  commended  their  habit 
of  stimulating  and  encouraging  in.Iependent  investigation.     He 


62  THE   AMERICAN 

regarded  the  Germans  in  this  respect  as  superior  to  the  Amer- 
icans. "  Americans  are  brilHant/'  he  said,  "  and  many  splendid 
ideas — which  the  Germans  call  epoch-making — such  as  the  cot- 
ton-gin. have  come  spontaneously.  In  the  main,  however,  this 
is  not  the  case.  The  great  discoveries  of  the  world  have  come, 
as  a  rule,  as  the  result  of  patient  effort  and  study.  In  this  the 
Germans  are  adepts.  In  Germany  every  encouragement  is 
given  to  a  man  to  devote  time  and  thought  to  new  ways  of 
doing  things.  ]\Ir.  ^Nlagee  spoke  of  the  Xernst  lamp  in  this  con- 
nection. This  discovery  of  a  German  professor  will  make  it 
possible,  it  is  believed,  to  secure  illumination  from  electricity 
with  only  half  of  the  current  used  that  is  now  necessary.  It 
will  throw  into  the  hands  of  many  thousands  of  people  the 
possibility  of  using  this  form  of  illumination.  '*  It  is  quite  pos- 
sible," Mr.  Magee  said.  "  that  improvements  on  this  lamp  may 
come  from  America.  It  will  still  be  the  Xernst  lamp,  however. 
What  I  want  to  see  is  a  Xernst  in  America."  During  the  last 
few  years  the  reports  of  scientific  discoveries  contained  in  the 
American  scientific  journals  have  contained  hardly  an  American 
name  to  act  as  a  land-mark.  The  names  of  the  chief  men  in 
science  to-day  arc,  with  almost  no  exceptions,  men  of  foreign 
birth  or  descent." 

"  The  difference,"  said  Mr.  Magee,  "  lies  in  the  fact  that 
the  Germans  are  patient,  studious,  thorough  people,  and  they 
go  to  the  bottom  of  things.  The  Americans,  on  the  other 
hand,  are  more  or  less  superficial.  They  are  brilliant,  but  they 
haven't  time  to  look  at  a  subject  from  all  sides  and  probe  into 
it  deeply  as  the  Germans  do.  In  science,  particularly,  there 
isn't  the  inducement  that  is  oft'ered  to  investigators  here  in  this 
country.  In  other  fields  the  same  conditions  hold  true.  In 
political  economy,  for  instance,  you  find  the  same  thing.  A  man 
learns  a  little  from  his  \\'alker  and  his  Adam  Smith  in  college, 
but  he  does  not,  as  the  Germans  do.  have  pointed  out  to  him 
the  exact  places  where  the  requirements  are  not  fulfilled,  where 
the  shoe  pinches,  and  then  set  to  work  to  gather  all  the  data 


"COMMERCIAL    IN\'ASI()N  "    OK    ECROPF.         63 

bearing-  on  that  particular  part   of  the  prolikiii.  in  uriUr  that 
he  may  hnd  a  sohition  of  the  <Ht"licuhy." 

One  is  at  once  iniiM'essed  with  the  fact  tliat  the  ( n.rnians 
have  been  quicker  than  other  nations  to  take  advanta^je  of 
improved  machinery  and  methods.  An  inspection  of  our  ex- 
ports to   Germany   in    the   last  half-dozen   years  slmws  an  ex- 


Wareliouses  and  D^Kks  at  Hamburg,  Shuwins  Advanced  .\\eil...as  ot  H.indl.n;;  FrcKtit. 

tremelv  satisfactorv  increase  in  our  sales  ..f  manufactured  goods, 
but  an  analvsis  of  the  character  of  those  manufactures  brings 
otit  the  fact 'that  a  large  part  has  been  in  labor-saving  machmcs. 
whose  economies  have  at  once  been  turned  against  us.  There 
are  some  shops  in  Germany  that  are  cjuite  as  admirably  htted 
^vith  modern  machinerv  as  ^vould  be  corresponding  shops  with 


us:  and  with  such  superior  ecjuipment,  an 


1  with  labor  costing 


04  THE    AMERICAN 

little  if  any  more  than  half  what  our  labor  is  paid,  the  Cierman 
manufacturer  will  make  us  look  to  our  laurels. 

It  is  true  that  present  economic  conditions  in  Germany 
are  far  from  satisfactory.  Germany  has  gone  ahead  under  too 
great  a  pressure.  The  pendulum  has  swung  too  far  and  is 
swinging  back.  There  has  for  some  months  been  a  marked 
dej)ression  in  man}-  manufacturing  lines,  antl  conditions  have 
prevailed  that  have  caused  apprehension  and  loss.  The  German 
banks  do  not  follow  the  conservative  English  and  American 
custom  regarding  the  promotion  of  industrial  enterprises,  and 
some  of  them  ha\e  become  imohed  in  the  fate  of  corpora- 
tions which  the}'  have  promoted  and  whose  securities  they  have 
sold  to  their  clients.  I  believe  the  unsatisfactory  situation  in 
Germany,  however,  is  only  a  reaction  from  too  rapid  progress; 
the  fundamental  conditions  are  sound,  and  in  the  world's  mar- 
kets we  are  i)retty  sure  to  fmd  Germany  one  of  our  most  able 
competitors. 

While  the  conditions  surrounding  investments  in  Germany 
are  in  many  respects  much  better  than  in  Jtaly  or  Austria-Hun- 
gary, the  superior  conditions  are  comj)ensated  by  lower  interest 
returns.  The  Germans  are  wide-awake  financiers,  as  well  as 
manufacturers,  and  the  opportunity  for  American  capitalists  to 
teach  them  lessc^ns  is  not  as  good  as  in  most  of  the  other 
Euroi)ean  countries.  In  some  respects  we  could  learn  a  good 
deal  that  would  be  of  achantage  to  our  own  iiuestment  circles 
from  the  German  practice.  A  code  of  cor])(inaion  laws  has 
been  enacted  that  has  many  jjoints  of  great  excellence.  l)ut  the 
Government  has  shown  its  ]^atcrnalism  to  a  great  degree  in  its 
efYort  to  control  operations  on  the  stock  and  produce  ex- 
changes, and  business  has  l)een  nuicli  hampered  from  that 
cause. 

Kaiser  W  illielm  has  said — and  industrial  Germany  agrees 
with  him — that  the  future  of  the  Cierman  nation  lies  on  the 
sea.  Germany  is  a  poor  country.  Iler  coal  mines  are.  in 
some  places,  3,000  feet  deep.     Her  iron  ores  must  be  supple- 


COMMERCIAL    INVASION"    OF    LUROl'K 


^'S 


The  Atbara  1  se  ot  Cunstriicti.m. 

This  bridge  was  built  by  an  AFiiLrR.m  i)rm.    aii.i  i:     ..  i ;  ;  i  UK-  F.nglish  conlraclors  jnd  jI»«j  cut  the 
time  required  by  ihc  F.nglish  bidders  from  twenty-six  weeks  to  fourteen. 

mented  from  the  riclicr  deposits  of  Spain  and  Sweden.  As 
population  increases,  Germany  must  imi)()rt  an  increasin.tr  pro- 
portion of  her  food-su])j)l\-.  Her  raw  >ilk  and  cotton  must  he 
imported,    and    in    fact    she    is    independent    in    no    single    raw 


"COMMKRC'IAI.    INVASION"    OF    KlROi^K 


67 


material.      Her  people  must  levy  upon  the  whole  world  for  their 

sustenance  and  to  maintain  their  intlustries.     To  such  a  nation 

foreign  commerce  is  as  the  breath  of  life. 

If  four  continents  shoulil  sink  into  the 

sea.  the   United   States  would   still   li\e. 

But  cut  ofY  Germany  from  her  foreign 

trade,  and  she  must  perish. 

To  sum  up  the  situation,  so  far  as  the 
nations  of  the  Triple  Alliance  are  con- 
cerned, we  see  that  Italy  and  the  Dual 
Monarchy  are  not  likely  to  become  for- 
midable competitors  of  ours  in  the  world's 
markets;  that  Germany  is  endowed  with 
a  spirit  and  ambition  which  will  probably 
make  her  our  keenest  rival,  although  we 
have  clear  advantages  in  cheap  raw  ma- 
terials. If  we  turn  our  attention  toward 
investments  in  these  countries,  attractive 
opportunities  will  be  found  in  Italy,  but 
hampered  by  an  uncertain  currency  stand- 
ard and  excessive  taxation.    Opportunity 

for  the  introduction  of  improved  methods  is  even  greater  in  .\us- 
tria,  but  political  uncertainties  and  racial  antagonism  more  than 
counteract  that  advantage,  and  the  money  standartl  is  (juitc  as 
uncertain  as  in  Italy.  There  is  much  greater  investment  safety 
in  Germany,  and  that.  I  believe  is  true,  in  spite  of  the  headlong 
declines  which  securities  have  made  on  the  Genuan  exchanires. 


A   j\\.>il.it    Cm 


Ill 


IT  is  in  Great  Britain  that  \vc  lind  in  its  fullest  development 
the  eft'ect  of  the  American  commercial  invasion  of  the  world's 
markets.  It  is  true  that  American  competition  has  been  making 
notable  inroads  into  the  connnerce  of  all  the  countries  of 
Europe.  But  important  as  is  the  effect  which  has  been  pro- 
duced upon  commercial  conditions  in  the  Continental  coun- 
tries, that  result  is  almost  insignificant  when  compared  with 
the  consequence  of  this  competition  in  Great  Britain. 
From  the  beginning  of  our  history  England  has  formed  our 
most  important  market,  and  for  two  generations  at  least  we 
have  been  the  largest  customers  for  English  products.  In  the 
last  half-dozen  years  a  change  has  taken  place  in  the  trade  bal- 
ance between  the  two  nations  which  is.  perhaps,  the  most 
notable  single  commercial  event  to  be  recorded  in  the  last 
decade.  We  have  been  steadily  reducing  our  purchases  from 
the  mother-country;  we  have  been  making  astounding  increases 
in  our  sales  to  her.  Comparing,  for  instance,  the  change  which 
has  taken  place  in  the  trade  movement  between  the  two  nations 
in  the  last  half-dozen  years  we  see  that  our  annual  purchases 
from  the  United  Kingdom  have  dropped  $16,000,000.  stand- 
ing last  year  at  $143,000,000.  In  the  same  period  our  sales  to 
Great  Britain  nearly  doubled,  going  up  from  $387,000,000  in 
1895  to  $631,000,000  last  year.  This  change  in  the  annual 
trade  balance,  showing  for  us  a  more  favorable  total  by  $260,- 
000,000  than  we  had  six  years  ago,  is  a  change  of  such  import 


''COMMKRL'IAI.    IWASION"    OF    Kl  KOPK  69 

as  can  only  moan  icvohuidnarv  transforniatii)n  in  ihc  industrial 
life  of  the  two  nations.  Those  figures  are  so  sis^iiificant  thai 
thev  need  to  be  dwelt  on  somewhat,  to  tix  in  the  mind  their 
importance.  Six  years  a.^o  we  sold  to  ( iroat  Ihitain  $jjS,- 
000.000  more  than  we  houiiht.  1  .a.^t  year  we  sold  to  her 
$488,000,000  more  than  our  innchases.  In  every  business  day 
last  vear  we  sent  to  her  $1.^00.000  more  than  we  bout^ht.      h'or 


Americin-built  Eni;ines  in  a  Glassrow  Electric  Line  Power-house. 


every   dollar's   worth    of   goods  we    bou-ht    wo    sold    her   four 
dollars  and  forty-one  cents'  worth  of  our  products. 

The  relative  importance  of  the  increase  in  our  trade  with 
Great  Britain  is  shown  when  we  compare  it  with  the  incroase 
which  we  have  made  in  <.ur  sales  to  all  the  rest  t.f  I':uro|)C. 
Noting  that  our  favorable  balance  in  the  trade  with  Croat 
Britain  last  year  showed  an  incroase  of  S4S8.fX)<).o(M)  over  the 
record  of   1895,  we  fmd  that  that   fiiiuro  compares  with  an  in- 


70 


THE    AMERICAN 


An  American  Electric  Travelling  Crane,  Nijni  Novgorod,  Russia. 

This  sliDws  a  sni.ill  locomolive  hanging  in  the  air,  one  end  being  supported  by  a  Irame  and  the  other 
by  a  chain  sling.     Capacity,  forty  tons. 

crease  in  the  same  ])erio(l  of  $219,000,000  in  our  trade  with  all 
Continental  Europe. 

Such  figures  as  these  make  it  easy  to  sec  \vhy  the  indus- 
tries of  Great  Britain  have  more  keenly  felt  our  competition 
than  has  the  rest  of  Iun-()])c,  but  even  these  statistics  by  no 
means  measure  in  its  full  significance  the  eii'ect  upon  British 
commerce  of  the  "  American  invasion." 

'J'he  nineteenth  century  may  well  be  said  to  have  been  the 
century  of  Cireat  Britain's  commercial  sui)rcmacy.  During  that 
hundred  vears  the  industries  of  the  country  stood  pre-eminent 
in  almost  every  line  of  manufacturing.  British  manufacturers 
commanded  completely  their  domestic  field,  but  they  did  much 
more  than  that.  1diey  were  in  easy  control  of  the  greater  part 
of  the  world's  connnerce  in  manufactured  products.  Not  only 
have  their  work.shops  held  a  commanding  position,  but  pre- 
eminence has  been  made  more  secure  l)y  control,  in  large 
measure,  of  the  commercial  fleets  of  the  world. 


'^  COMMKRClAI.    IWASION"    OF    KIROIM-:  71 

\\  licii  our  own  niamitactmcrs  Iioi^an  sitIdusIv  t<»  reach  out 
a  few  years  ayo  ior  foreign  trade,  then-  were  fi-w  of  llnni  with 
the  hardihood  to  attempt  t(^  meet  British  eompetititMi  in  thr 
home  field.  What  we  (Hd  do  was  .sueeessfnlly  to  eompete  at 
points  so  far  thstant  from  the  I'.ritish  faetories  lh;it  our  <iwn 
produeers  were  Httle  handicapped  in  tlie  way  of  freight  charges. 
We  successfully  entered  the  South  African  gold-tields  and  su])- 
])lied  most  of  the  machinery  for  operating  the  deep  mines  of 
the  Rand.  \\'c  went  into  the  harxest  fields  of  almost  every 
British  colony  and  sold  agricultm-al  implements  to  cultivate 
and  gather  their  grain.  We  began  successfully  to  compete  in 
bridge-building  on  the  pioneer  railroads  of  Africa,  and  then  we 
supplied  those  railways  with  locomotives,  as  we  did  also  the 
government  lines  of  India  and  the  Far  East.  Oiu"  success  ex- 
tended rapidly   and   it   soon   became   evident    that   the   political 


American-buili  Vertical  Engine  in  the  Electric  Tramway  Power-house.  Dublin. 


72  THE    AMERICAN 

lies  of  Great  Britain's  colonies  were  not  in  themselves  suffi- 
cient to  bind  to  her  their  trade.  For  a  good  many  years 
English  contractors  had  things  their  own  way  in  railroad- 
building  in  the  British  colonies.  One  day  we  shocked  them 
when  their  own  best  l)id  of  15  guineas  a  ton  for  constructing 
the  Atbara  Bridge  was  met  by  an  American  bid  of  £10  13s.  Od.. 
and  their  time  of  twenty-six  weeks  was  cut  b}-  the  American 
contractor  to  fourteen  weeks.  They  were  soon  still  more  sur- 
prised when  the  bids  for  the  Gokteik  viaduct  in  Burma  were 
opened.  This  was  a  much  more  important  work.  The  best 
luiglish  bid  was  £26  los.  ])er  ton.  with  three  years'  time  to 
complete  the  job.  Americans  took  the  contract  at  £15  a  ton 
and  completed  the  work  in  twelve  months.  The  b'gandy  via- 
ducts, still  more  important  in  size,  were  built  by  American 
contractors  at  a  cost  twenty  per  cent,  below  the  English  price, 
and  they  were  completed  in  forty-six  weeks,  against  the  Eng- 
lish recpiirement  of  130  weeks. 

Such  illustrations  might  be  almost  indefmitely  extended,  nor 
would  thev  need  to  be  confined  to  bridge-building.  Their  special 
imjx.rtance  is  in  the  l)asis  which  the}'  formed  for  a  nKuiufaclur- 
ing  competition  w  hich  drew  nearer  and  nearer  to  the  home  mar- 
ket of  English  manufacturers.  Success  upon  success  has  at- 
tended our  efforts  to  compete  industrially  with  f^ngland.  uiuil  we 
are  at  last  sending  our  manufactured  goods  into  the  centre  of  the 
Engli.shmen's  domestic  field.  There  are  English  districts  whose 
names  have  become  words  in  our  language  .synonymous  with 
certain  great  classes  of  manufactured  goods.  \\  e  have  come  to 
compete  successfully  in  those  very  fields  in  their  great  specialties, 
it  is  literallv  true  that  we  have  sold  cottons  in  Manchester, 
pig-iron  in  Eancashire.  and  steel  in  Sheffield. 

IXnails  of  this  invasion  cover  a  broad  field.  'I'hc  changed 
relations  between  the  industries  of  the  two  countries  are  prob- 
ably the  most  pronounced  in  tlie  production  of  iron  and  steel, 
but  in  a  hundred  lines  of  manufactures  statistics  tell  the  same 
storv  of  great   growth   in  our  exports  and  (juiescencc  or  deca- 


"COMMKRCIAI.    IWAMON"    ()|     M  k(  )l'h 


:i 


American  Steel  BuildiiifiS  and  Steel  Chimney  Stacks  for  an  Electric  Tramway 
Power-huuse,  Dublin. 


In  cuursr  ol 


dence  in  the  correspondinij  British  field.  Much  less  tlian  a 
score  of  years  ago  England  produced  twice  as  much  [)ig-ir«)n 
as  was  produced  in  the  United  States.  Now  we  have  an  out- 
put half  as  much  again  as  England's,  in  sj)ite  of  the  fact  that 
her  own  industrx  has  steadil\'  grown,     h'or  many  \ears  we  drew 


From  ,1  /"':  .  ,   Hrooti.yn. 

The  Battle-ship  Retvizan,  Built  in  America  for  the  Russian  Government. 

(Holland  submarine  boat  in  foreground.) 


COMMKRCIAI,    INWA.slON   •    Ol     l.l  KOl'K 


75 


upon  Engiaiul  for  great  stocks  i^i  iron.  ( )nr  c.irly  railroads 
\vere  laid  with  Englisli  rails.  Now  we  arc  shipping  many  thou- 
sand tons  back  across  the  Atlantic  to  her  and  to  her  colonics 
around  the  world.  The  reconl  in  iron  has  heen  far  eclijised  by 
the  development  in  steel  production.  We  reached  a  |)oinl 
where  we  could  put  unwrought  steel  into  the  l-'.ngiish  markets 
in   successful   competition  with   the   steel-mills  there,  and   with 


.  ,.,;;  u  copyrighted  phoiograpk  by  Frank  J/egger,  .V.zii    )orf.: 

The  Bank  of  England,  London. 

English  conservatism  will  not  permit  a  telephone  within  the  sicreJ  precincts  of  thi*  huilding. 

that  as  a  basis  to  build  on  and  with  the  aid  of  snpcrior  mechan- 
ical genius  we  have  bnilt  np  a  market  of  great  proportions  for 
almost  every  line  of  iron  and  steel  mannfactnres.  We  sent  to 
England  in  a  single  year  lOO  locomotives.  We  have  sent 
numberless  stationary  engines  of  all  types  and  sizes,  and  with 
them  boilers,  pipes,  pumps  and  pumi)ing  machinery,  car-wheels 
by  the  thousand,  wire  and  wire  nails,  metal-working  machinery 
of  every  type,  and  great  shipments  of  electrical  dynani'.s  :md 
appliances. 


76  THE    AMERICAN 

One  of  the  industries  that  has  felt  most  severely  the  Ameri- 
can competition  is  the  tin-plate  trade  of  South  Wales.  Ten 
years  ago  it  was  a  gigantic  industry.  It  had  no  thought  of 
competition  in  the  home  field  and  had  complete  control  of  the 
American  market.  In  1890,  330.000  tons  of  tin-plates  were 
exported  from  Wales  to  America.  Soon  after  that  we  began 
turning  out.  almost  in  an  experimental  way,  a  small  product  of 
tin-plate.  That  production  has  increased  with  such  rapidity 
that  our  manufacturers  are  practically  in  control  of  their  home 
market  and  ha\e  actually  landed  at  Cardiff  large  shipments  of 
American  tin-plate. 

England's  coal-mines  have  been  one  of  her  most  important 
sources  of  wealth.  They  have  given  to  her  manufacturers  cheap 
motive  power  which  has  been  one  of  their  most  important  ad- 
vantages. They  have  propelled  the  conmiercial  fleets  of  the 
world,  and  their  product  has  formed  England's  most  important 
export.  Coal  has  been  the  main  support  of  the  shipping  in- 
dustries which  ha\e  gi\en  her  so  much  of  her  conuuercial 
supremacy,  constitiuing.  as  it  has.  foiu--iifths  of  the  weight  of 
all  the  connnodities  exported  from  the  Ih-ilish  Isles.  luigland 
owns  sixty  per  cent,  of  the  world's  steam  tonnage,  and  any- 
thing which  threatens  seriously  to  alter  the  established  order  in 
freight  movements  is  of  great  commercial  import.  The  foreign- 
trade  returns  do  not  yet  show  us  as  a  great  factor  in  the  world's 
coal  trade.  England  is  still  the  dominating  producer.  But 
while  the  extent  to  which  om"  ex])orts  ha\c  attained  is  not 
material,  the  figures  which  show  the  beginning  of  our  entrance 
into  the  world's  coal  markets  are  in  some  ways  more  signifi- 
cant than  any  others  that  oiu"  foreign  trade  presents.  WA'  are 
just  in  the  beginning  of  what  is  certain  to  be  an  ccononnc  de- 
vcloiHuent  of  world-wide  importance.  E.ngiish  authorities  them- 
selves recognize  this  and  admit  th.'it  a  new  current  of  trade  has 
been  set  in  motion  that  will  sweep  away  a  lot  of  old  land- 
marks. Our  production  of  36.000.000  tons  in  1870.  increased 
to  71.000.000   in    1880,  to   170.000.000  in   1890,  and  to  240,- 


COMMKRCMAI.    lN\A-sl()\  "    ( )|     1,1  ROl'K 


77 


965,917  1)}  the  end  of  the  ceniiny.  passim;  with  the  closing 
years  Great  Britain's  prodnction  and  estahlishini;  onr  cual-ticlds 
as  the  greatest  source  of  supply  in  the  world.  The  enormous 
development  of  cnn-  own  consumption  kept  pace  with  the  in- 
crease of  the  ]M-oduct.   so  that  little  attention  has  been  turned 


American  Linr.type  Machines  Used  l\v  ;i  Sheilii-lJ  Daily  Newsrar"- 

toward  the  export  trade.  Plans  are  now  in  han<l.  h..wever. 
which  will  make  the  development  <.f  that  expnrt  husiness  the 
dominating  feature  of  our  foreign  trade  within  the  next  few- 
years,  and  which  promise  more  i)owerfully  to  alTect  British  m- 
du.stry  than  any  f.ther  single  development  that  ha^  inlhieiiced 
the  trade  of  the  two  countries. 

The  position  which  we  occupy  as  a  source  of  coal  pn.duc- 


\  \n 


78  THE    AMERICAN 

lion  is  of  such  great  iniporlance  in  any  discussion  of  inter- 
national trade  that  it  is  worth  while  noting  some  of  its  signifi- 
cant features.  In  1870  the  ccnnhined  coal  production  of  Great 
Britain,  Germany,  France,  and  Belgium,  our  chief  competitors 
in  Europe,  was  176,000,000  tons,  about  six  times  our  own  pro- 
duction of  29,000,000.  By  1898  the  European  output  had 
doubled,  those  countries  producing  352.900,000  tons.  But  in 
that  same  time  our  output  had  increased  700  per  cent,  and 
stood  at  2i8,cco,cco,  or  sixty  per  cent,  of  the  total  output  of 
Europe,  as  compared  with  six  and  two-thirds  per  cent,  in  1870. 
We  have  five  times  the  coal  area  of  Europe,  50,000  scpiare 
miles  as  compared  with  11, ceo  square  miles,  and  we  have  in 
addition  200,000  sc^uare  miles  of  lignite  and  other  workable 
fields  in  reserve.  Our  bituminous  coal  lies  near  the  surface, 
and  most  of  it  can  be  worked  by  drift  mines  above  the  water- 
level.  European  mines  are  frequently  3,000  and  sometimes 
4,000  feet  deep.  Our  seams  of  coal  average  twice  the  thick- 
ness of  the  coal  measures  of  Europe.  The  result  of  these 
conditions  is  seen  in  the  increasing  cost  of  European  coal  and 
the  decline  in  American  mine  prices.  In  1885  the  a\"erage  price 
of  European  mine  coal  was  $1.62  per  ton.  and  in  the  United 
States  $1.58.  Our  methods  were  less  skilful  and  the  superior 
ad\antages  of  the  mines  in  the  United  States  were  not  yet 
manifest.  In  1899,  ho\\e\er,  the  mine  price  of  European  coal 
had  risen  to  $1.96,  and  in  the  I'nited  St;ites  the  price  had 
fallen  to  $1.10,  leaving  a  margin  in  our  favor  which  o])erates, 
at  cverv  stage  of  ])ro(luction,  to  lower  the  manufacturing  cost 
of  .American  ex])orts. 

llluslralions  of  our  successful  C(inii)otition  mii^ht  be  multi- 
plied into  a  tiresome  catalogue.  \\'e  ha\e  secured  practical 
control  of  the  match-making  industry:  our  tobacco  manufact- 
urers have  become  the  donn'nating  influence  in  the  English 
trade  situation:  half  the  newspapers  of  England  are  printed  on 
.American  presses  or  upon  presses  built  on  American  models  in 
English   shops  that   are  branches  of  the   home   manufactories. 


"COMMKRC'IAI.    1N\  ASION"    OF    KIROI'I-".  -9 

]\Iany  of  lliosc  nc\\s|)ai)crs  arc  printed  oii  AnK'iicaii  j)apcr. 
One  of  the  serious  tibstacles  hampering-  l-.ni^lisli  industries  is 
illustrated  in  the  paper  trade.  The  freii;ht  from  the  Xew  luip- 
land  pai^er-niills  to  the    London    Docks  is  less  than   fr<»iu  tlic 


Three  American-built  Quadruple  Presses  Used  by  a  MaiKiiester  Daily  Newspaper. 

Cardiff  mills  to  the  metropolis,  and  one-half  the  frei.uht  chari,a- 
on  an  American  shipment  is  made  up  of  terminal  char^-cs  ui- 
curred  in  the  last  twelve  miles  of  the  ^.wo-mile  journey.  Tr*^!)- 
ablv  half  the  electric-cars  in  the  United  Kintjclom  are  driven  by 
American-made  motors.     When  the  r:nKlish  postal  authorities 


8o  THE    AMERICAN 

entered  tlie  telephone  field,  no  English  hrm  could  supply  the 
number  of  instruments  wanted,  and  the  contract  went  to  a 
Chicago  company.  England  is  the  home  of  cheap  woolens, 
but  our  manufacturers  of  ready-made  clothing  are  dexeloping 
an  important  trade  there,  compensating  for  the  higher  cost  of 
their  cloili  and  the  larger  wages  of  their  workmen  by  their 
advantages  in  specialized  labor  and  superior  methods  and 
machines.  Our  car-l)uilders,  who  have  so  specialized  the  build- 
ing of  freight-cars  that  the  rough  timber  goes  in  at  one  end 
of  the  workshop  and,  almost  under  the  eye  of  the  spectator, 
comes  out  at  the  other  end  a  finished  car,  found  an  easy  mar- 
ket in  competition  with  old-fashioned  methods  ami  hand  labor. 
It  is  only  within  a  few  months  that  there  haNc  Ijcen  in  any 
English  shop  machines  for  boring  square  holes  such  as  cnal)]e 
our  car-manufacturers  rapidly  to  mortise  timbers  in  car  con- 
struction. The  work  that  is  done  in  an  instant  with  a  whirl 
of  flying  chips  was  laboriously  bored  and  chiselled  out  by  hand 
by  the  English  workers.  The  same  advantage  in  labor-saving 
wood-working  machines  enables  us  to  send  finished  wood-work, 
sash  and  doors,  for  buildings  at  i)rices  which  cannot  be  eciualled 
in  the  English  shops. 

Instead  of  enumerating  the  fields  in  which  we  have  met 
with  competitive  success,  it  will  be  more  profitable  to  analyze 
in  some  measure  the  reasons  for  our  strength  and  for  Great 
Britain's  industrial  weaknesses.  A  few  weeks  ago  I  was  at  a 
dinner  in  London  at  which  was  gathered  a  group  of  men  rep- 
resentative of  British  industrial  and  commercial  life.  The  con- 
versation was  on  American  comi)etition.  and  at  the  conclusion 
of  the  discussion  the  views  of  these  men  were  smnmcd  up  in 
a  conclusion  with  which  all  agreed,  and  their  verdict.  I  sup- 
pose, may  be  taken  in  the  main  as  representing  the  best  com- 
mercial judgment  in  ( ireat  Britain.  All  agreed  that  there  is  a 
serious  crisis  in  British  industry,  and  they  grouped  the  main 
reasons  for  it  under  three  heads.  The  first  is  the  attitude  of  the 
English  workman  in  his  desire,  made  elTective  by  the  power  of 


"COMMERCIAL    INVASION"    OF    lU'ROPK 


Si 


trades-nnionisni.  lo  restrict  the  oiitj)!!!  of  labor  to  tlic  lowest  pos- 
sible unit  per  man:  tlie  second  is  the  con>ervativeness  of  em- 
ployers and  the  hostihi)  of  workmen  to\\ar<l  the  intro<lnctioii  .if 
labor-saving-  machinery;  and  the  third  is  "municipal  iradins;.'" 
a  phrase  Avhich  we  have  not  encountere<l  nuich  at  home,  but 
which  means  the  activities  of  numicipalities  in  industrial  luidcr- 
takings,  such  as  the  development  of  systems  of  transportation 
and  communication,  the  production  of  light  and  heat,  in  a  word 
the  numicipal  control  of  the  utilities.  On  this  last  point  there 
would  undoubtcillv  be  found  wide  differences  of  opinion  among 
high  authorities,  and  it  is  not  my  j)urpose  here  to  enter  into  a 


^  II  n  n  r  n  'f  •-  ^  c  - 
li  II    I!  n  II  IT  n  'I  n  u  ii   n :  i  n 


An  Electric  Companv^s  Hl;iiu  .il  .\'l,uKll(.^ic.,  i.i.i;l.ind. 

(In  course  of  construction.)     Electrical  machines  of  American  model  are  to  be  built  by  American  method*. 

discussion  of  the  (juestions  involved  in  it.  In  regard  to  the  hr>t 
two,  however.  I  Ijelieve  there  is  pretty  unanimous  agreement 
in  the  minds  of  trained  observers  of  the  conditions  of  industrial 
afTairs. 

The  highest  development  of  labor-unions  has  been  in  (ireat 
Britain.  Much  of  the  earlier  growth  of  these  organizations  was 
along  correct  economic  lines,  resulted  in  distinct  benefit  to  or- 
ganized labor,  and  was  undoubtedly  helpful  t<.  P.riti.-^h  industries 
generally.  A  few  years  ago  there  came  into  existence  a  new 
unionism,  which  meant  a  unionism  of  force,  a  unionism  which 
carried  its  points  by  strikes,  and  made  strikes  efTectivc  by  forci- 
ble interference  with  non-union  labor.     That  new  nnioniMU  has 


82  THE    AMERICAN 

lately  been  succeeded  by  a  newer  unionism,  which  has  a  false 
economic  theory  for  its  foundation,  and  is,  I  believe,  more  than 
any  other  single  cause,  the  influence  to  which  can  be  attributed 
the  present  unhappy  state  of  British  industry. 

British  trades-unions  embrace  nearly  2,000,000  members. 
The  greater  part  of  this  army  of  organized  labor  has  adopted 
a  false  economic  theory.  They  hold  that  there  is  a  given  amount 
of  work  to  be  done  in  Great  Britain,  and  that,  if  the  day's  out- 
put of  the  individual  worker  is  decreased,  the  result  will  be  an  in- 
crease in  the  aggregate  number  of  days'  labor.  They  might  not 
all  of  them  state  the  proposition  in  just  that  way,  but  the  irre- 
sistible logic  of  their  position  carries  them  to  exactly  that  point. 
It  is  a  cardinal  principle  with  the  members  of  most  of  the  labor- 
unions  in  England  to-day  that  it  is  desirable  for  them  to  produce 
with  each  day's  work  as  small  an  output  per  man  as  it  is  possible 
to  compel  employers  to  accept.  They  believe  that  if  a  man  does 
only  half  a  given  amount  of  work  in  a  day,  two  men  will  have  to 
be  employed  where  one  was  before,  or  the  job  will  furnish  employ- 
ment for  the  one  for  double  the  length  of  time.  They  have  the 
further  uneconomic  principle  of  a  minimum  wage,  which  is  to  be 
paid  to  all  men  employed,  without  regard  to  the  relative  value 
of  their  labor.  Here  is  how  the  situation  is  viewed  by  high 
English  authority:  \\'ith  the  principle  of  the  minimum  wage 
is  conjoined  the  principle  that  there  shall  be  no  maximum  wage; 
that  is  to  say,  if  any  workman  shall  induce  his  employer  to  offer 
him  higher  wages  than  his  fellows,  they  at  once  demand  that 
the  same  increased  wages  shall  be  paid  to  all  of  them  alike.  If 
the  master  seeks  refuge  in  improved  machinery,  the  principles  of 
limitation  of  output  and  minimum  wage  arc  still  enforced.  The 
machine  must  not  be  allowed  to  do  all  it  can.  any  more 
than  the  men:  nor  mav  it  have  an  attendant,  however  simple 
his  duties,  at  any  lower  rate  of  wages  than  that  fixed  for 
the  skilled  artisan  who  did  the  work  before  the  machine  was 
introduced.  The  machine,  in  short,  must  not  increase  out- 
put   or  displace  labor.      It   is  broadly   argued   that   men   will 


"COMMKRe'IAL    IWASION"    Ol     KlRol'K 


«3 


work  their  Itost  if  it  is  nuulc  woitli  tlu'ir  while,  ;iii<l  imt 
otherwise.  Init  tlie  unions  s;i_\  it  shall  not  he  niado  worth  their 
wliile.  It  is  nni  worth  the  while  of  a  hail  workman  t«)  do 
l)etter  heeanse  his  mininiuni  wa:^e  is  seenrc.  It  is  not  w«»rlh 
the  while  oi  the  i^^nod  workman  to  put  forth  his  >treiii;th  or 
skill,  heeanse  he  inem^s  odimn  amoni;'  hi^  elass  ami  eamiot 
get  increased  wages  in  retmn. 

It  hardly  seems  credihle  that   the  great  mass  of  organi/.e<l 
labor  ill  England  should  he  so  blind  to  plain  eeonomie  truths  as 


An  American-built  Crane  at  Miclieville,  France. 

Arranged  for  h.indling  long  beams  and  shapes  in  stock-yard,     (.apa.ily.   s.ooo  kilo*. 

to  believe  that  their  country  can  maintain  its  commanchng  posi- 
tion in  the  world's  comi)etitive  markets  when  la1>or  uses  its  keen- 
est ingenuity  and  best  endeavors  to  devise  ways  to  restrict  indi- 
vidual production.  Instances  can  be  produced  indehnitely  to 
support  the  assertion  th.at  such  i^  their  l)elief.  Such  itistauces 
will  show  quotations  from  the  rules  of  the  organizations  which 
are  devised  to  restrict  labor  and  discourage  energetic  workmen. 
There  are  nianv  e.\amj)les  of  direct  official  discipline  nf  members 
who  have  sliown  a  tendency  to  turn  out  more  work  in  a  day  than 
the  minimum  which  cmi)loyer>  can  be  forced  to  accept.      I  have 


84  THE    AMERICAN 

heard  of  many  cases  where  men  of  ambition  and  energy  who 
found  it  difficult  to  adapt  themselves  to  the  easy-going  pace 
which   the   union   prescribes,   got  very    much   the    worst   of  it 
in  the  contest  which  always  follows  a  period  of  acti\-e  work. 
Men  who  start  in  to  turn  out  a  full  day's  work  are  frequently 
directly  disciplined   by  their  unions;   but   if  it   does  not  reach 
that  point,  they  are  at  least   at  once  put  under  a  social  boy- 
cott.     They  are  called  "  sweaters  "  and  "  master's  men,"  and 
nuich    ingenuity    goes   into    the    devising   of   ways   and    means 
to   make    their  lives   miserable   and   their   positions   untenable. 
Some  of   the   notable  illustrations  of  the  spirit  of  curtail- 
ment of  production  are  found  in  the  building  trades.      Brick- 
layers   in    London,    for    instance,    do    not    average    over    400 
bricks  a  day;  those  employed  by  the   London  County  Coun- 
cil  on   public   work    lay   materially   less.      When   it   is   under- 
stood that  an  active  man  can  readily  lay   1,000  bricks  a  day, 
and   from  that   up  to   1,600,   it  will  be  seen  what  a  disastrous 
grip   this   "  go-easy  "    policy    has.      We  have  made,   with   our 
exportations    running   into    millions   of    dollars,    great    inroads 
on  the  English  boot  and  shoe  industry.      Some  of  that   suc- 
cess can   be   accounted  for  by   superior   machinery  and  better 
organization    and    division    of   labor,    but    it    is    not    surprising 
to   find   in    this,    as   in   a    good   many   other    fields    where   we 
have    made    pronounced    competitive    progress,    that    there    is 
a    clear    understanding    in    the    trades-unions    controlling    the 
manufacture    of    boots    and    shoes    that    a    man's    day's    work 
shall  be  limited  to  a  certain  quantity,  and  that,  should  he  do 
more,  his  life  will   be  made  intoleral)le.      The  delusion  which 
the  English   workman   has  harbored,   that    there   was   a  certain 
amount    of    work    to    be    done    in    that    industry,    and    that    if 
everyone  tried  to  do  as  much  as  he  could  there  would  not  be 
work   enough   to  go   around,   has  led  him   to   the   natural   re- 
sult   of    such    a    fallacy.      Chicago    factories,    usually    paying 
wages  from  two  to  three  times   as  high  as  are  ruling  in  the 
English    factories,    are    sending    enormous    exports    into    the 


"COMMERCIAL    IWASK  )\  -    OF    KIROPK  S5 

English  ficKl.  Tlioso  exports  iwo  _vc'ai>  a.i;«>  wrn-  a  Imlc 
over  $500,000;  a  year  a.^o  \hv\  pasM'd  the  million,  ami  last 
year  they  were  well   on   toward  .S-'.ooo.ooo. 

.Both  I'lnglish  bniUlers  and  workmen  are  h;ivini;  a  most 
valuable  object-lesson  in  the  construction  of  the  great  manu- 
facturing plant  of  the  British  W'estinghouse  Company.  This 
company  is  building-  a  $5,000,000  j)lant  at  Manchester,  in 
which  electrical  machines  of  American  model  are  t(.)  be  l»uill 
by  American  methods.  Due  of  the  finest  mechanical  i)lants 
in  the  world  is  being  installed,  and  the  manner  in  which  the 
building  operations  have  been  pushed  forward  have  been  the 
marvel  of  both  luigiish  builders  and  workmen.  The  plant 
was  started  under  English  supervision.  i)ut  the  work  dragged 
along  in  such  hopeless  fashion  that  the  task  of  comjjleting  it 
was.  last  April,  i)ut  into  the  hands  of  American  buil<ling 
contractors.  They  spent  $3,000,000  in  eight  months,  and 
managed,  though  under  great  ditficnlty,  to  show  a  rapidity 
of  construction  such  as  England  had  probably  in  all  ber  his- 
tory never  before  seen.  These  contractors  met  with  the 
same  spirit  among  the  English  bricklayers  that  is  to  be 
found  everywhere.  With  all  their  energy  they  coidd  not 
get  them  up  above  800  bricks  a  day,  so  they  imported  some 
American  bricklayers  and  set  them  at  work  on  the  slowly 
rising  walls.  They  laid  nearly  2,000  liricks  a  day  The 
pride  of  the  English  workmen  was  at  stake,  and  they  aban- 
doned their  "go-easy"  principles,  took  off  their  co.it^.  .ind 
demonstrated  that  they  were  as  got^d  bricklayers  as  the  im 
ported  Americans,  but  how  they  will  reconcile  the  record 
that  they  made  under  the  eyes  of  the  .*^t.  I.onis  contractors 
with  what  they  are  willing  to  do  under  h'nglish  superin- 
tendence is  a  little  ditTicnlt   to  sav. 

In  the  coal-mining  industry  this  fallacious  policy  of  trades- 
unionism  takes  the  form  of  "  stop  d.ays,"  when  all  the  miners  stop 
work  without  respect  to  the  views  of  the  mine-owners  because 
they  believe  that  by  so  doing  they  will  restrict  production,  hold 


86 


THE    AMERICAN 


lip  ])riccs.  and  so  kecji  up  their  own  wages,  which  arc  regulated 
bv  a  sli(Hng  scale  based  on  the  ])rice  of  coal.  Their  economics 
have  not  been  broad  enough  to  grasp  the  prospect  of  American 
competition,  but  their  methods  are  hastening  its  success. 


A  SliMvel-bucket  in  Use  at  the  American-buiit  Sti)iai;e  aiul  Rehandlinir  I'laiit  at 
Mariupol,  Russia. 

Since  the  great  machinists'  .strike  of  a  few  years  ago  condi- 
tions in  that  trade  are  somewhat  better  than  bcfcire  that  dispute, 
which  ended  so  disastrously  for  organized  labor.  There  are  still 
many  restrictions  imposed  upon  manufacturers  which  prevent 
them  from  securing  anything  like  the  best  results  from  machinery 
which  thev  introduce.     Throughout  the  mechanical  trades  the 


"COMMKRCIAL    IWASION  "    OK    KIROIM-.         S; 

same  false  notion  that  the  less  work  a  man  does  in  a  day  ihc  more 
he  leaves  to  be  done  by  himself  or  his  fellows  is  particularly  aimed 
against  labor-sa\ing"  machinery,  and  e\er\  rule  the  nni<)u>  cm 
devise  to  restrict  the  output  of  machinery  and  increase  the  labor 
cost  is  considered  by  the  unions  their  material  ijain. 

The  second  serious  embarrassment  in  which  liritish  industries 
are  involved  is  the  difficulty  surroimdin<;-  the  introduction  of 
modern  labor-saving  machines  and  mechanical  methods.  In 
the  way  of  that  improvement  is  the  double  obstacle  of  the  con- 
servativeness  of  employers  and  the  opposition  of  the  men. 
Evervone  who  has  studied  the  ]Cn,ulish  industrial  situation  will 
agree  unreservedly  that  labor-saving  machinery  nnist  be  exten- 
sively introduced,  that  the  manufacturing  plains  nuist  l)e  put  on 
mechanical  equality  with  those  of  America  and  Germany,  before 
the  English  manufacturers  can  hope  again  to  produce  at  as  low 
a  unit  of  labor-cost  as  is  done  in  the  two  competing  countries. 

Conservatism  is  a  corner-stone  of  the  English  character,  and 
it  seems  particularly  pronounced  in  some  of  the  families  which 
have  hereditarily  been  in  control  of  manufacturing  industries. 
A  machine  which  did  satisfactory  service  for  a  man's  father  and 
grandfather  comes  to  be  regarded  with  a  certain  veneration. 
With  us  there  is  no  reconmiendation  better  than  that  a  machine 
or  method  is  new.  To  speak  to  a  manufacturer  of  a  new 
machine  or  a  new  process  interests  him  at  once.  Hi-  mmd  is 
open  to  investigate  any  improvement  that  is  suggested.  an<l. 
what  is  still  more  important,  he  has  the  courage  when  the  value 
of  the  improvement  is  demonstrated,  to  throw  on  to  the  scrap- 
heap  machinery  that  may  have  cost  him  much,  and  to  repl.ic-  it 
with  machinery  which  will  accomplish  more. 

The  mind  of  the  English  manufacturer  does  not  work  along 
these  lines.  As  a  rule  he  has  a  deep-seated  prejudice  against  a 
thing  that  is  new;  it  is  not  easy  to  win  him  over  to  an  exami- 
nation of  a  new  machine  or  metho<l.  and  it  is  alwavs  diflicull  to 
induce  him  to  throw  on  to  the  scrap-heap  machines  which  have 
for  vears  done  him  good  and  i)rolitable  service. 


88  THE    AMERICAN 

The  characteristics  of  conservatism  that  made  the  Enghsh 
business  man  for  years  combat  the  introduction  of  the  type- 
writer, the  conservatism  which  to-day  will  not  permit  a  telephone 
within  the  sacred  precincts  of  the  Bank  of  England  has  in  its  op- 
eration in  the  industrial  tield  cost  England  dear. 

Only  the  smaller  part  of  the  difficulty  is  over  when  the  manu- 
facturer has  grasped  the  necessity  for  introducing  a  machine. 
His  workmen  are  more  prejudiced  than  he  against  mechanical 
innovations.  They  may  have  seen  many  examples  of  machines 
which,  though  first  taking  away  the  necessity  for  hand  labor, 
in  the  end  create  far  more  opportunity  for  labor  than  at  first  ex- 
isted, but  those  examples  have  failed  to. impress  them.  It  is  only 
with  the  greatest  difficulty  that  labor-saving  machines,  absolutely 
essential  to  the  continuance  of  manufacturing  establishments 
in  a  position  to  meet  international  competition,  can  be  put  into 
operation  in  the  English  workshops.  IMen  sometimes  refuse 
altogether  to  operate  machines.  The  unions  enforce  restrictions 
in  regard  to  the  number  of  automatic  machines  that  one  work- 
man will  be  permitted  to  attend.  They  go  on  strike  because 
non-union  labor  is  put  at  work,  and  they  hamper  and  embarrass 
in  a  hundred  ways  the  manufacturer  who  wishes  to  provide  mod- 
ern equipment. 

All  that  looks  unreasonable  at  first,  but  the  antagonistic  at- 
titude of  English  workingmen  toward  labor-saving  machinery 
can  be  l)etter  understood  when  some  of  the  other  restrictions  of 
English  labor  organizations  are  comprehended.  Each  trades- 
union,  believing  there  is  a  definite  amount  of  work  to  do,  and 
hoping  to  confine  all  of  it  of  a  ])articular  character  to  its  own 
members,  lias  hedged  about  entrance  into  each  trade  with  the 
greatest  of  difficulties.  The  result  is  that  there  is  in  England 
the  least  possible  mobility  of  labor.  A  man.  having  learned  one 
trade,  finds  it  almost  imjiossible  to  draw  out  of  that  and  en<-er 
another.  There  are  miimte  restrictions  regarding  apjircntices, 
and  the  rules  provide  fines  and  disciplines  for  any  member  who 
teaches  an  outsider  or  permits  him  to  use  tools  or  in  any  way  aids 


"COMMKRCMAI.    1N\AS1()N-    Ol     KlROl'K 


8., 


him  in  Icaniin;;-  the  nuhiiKMits  of  a  traik-.  W  lu'ii  tliis  is  iiikKt- 
stoocl  it  will  be  seen  that  the  position  of  an  l'".ni;lisli  workman, 
if  his  place  be  menaced  by  the  introdnction  of  labor-saviniij  ma- 
chinery which  might  force  him  to  seek  enipl<i\niem  in  s,,ine 
other  traile.  is  a  serious  one. 


HI         .*^ 


Steel  Ladle  Crane  in  a  Foundry,  Mariupol,  Russia. 

Used  for  carrying  the  molten  metal  from  the  steel  furn.ices  to  the  nlouK^^.     » jp«ilv.  fifty  tonv 

Conditions  as  they  have  been  evolved  nndir  the  rnle  ..I  the 
walking  delegate  and  of  labor  lea<lers  with  the  shallowest  notions 
of  economics  are  the  desi)air  f)f  I-jiglishmen  who  hope  to  see 
their  countrv  win  back  a  lost  indn^trial  positit.n.     Tlu.se  condi- 


90  THE    AMERICAN 

tions  arc  most  profitable  subjects  for  study  by  us.  We  have 
the  beginnings  of  just  the  sort  of  unionism  which,  in  its  full  de- 
\-elopmcnt,  has  brought  distressing  resuUs  on  England.  There 
cannot  l)e  found  in  CJreat  Britain  any  more  absurd  regulations 
restricting  the  output  of  labor  than  were  in  force  in  the  building 
trades  in  Chicago  for  two  years,  ending  in  paralyzing  the  build- 
ing industry  there.  We  have  alread\-  grown  accustomed  to  the 
strike  which  has  for  its  ol)jcct,  not  an  increase  of  wages  or  a  re- 
duction of  hours,  but  the  imi)osition  of  restrictive  regulations 
which  would  result  in  a  decreased  product.  So  long  as  our  in- 
dustries can  go  forward  receiving  the  generous  co-operation  of 
labor  ^\hich  is  still  the  rule,  wc  will  ha\e  an  achantage  over  the 
countries  of  Europe  in  spite  of  a  wage  scale  more  than  double 
tlieirs,  but  that  advantage  will  be  menaced  if  the  false  concep- 
tions which  now  rule  most  of  the  I^nglish  labor  organizations 
are  ever  generall}-  adoi)te<l  by  our  own  workers. 

When  \ve  turn  to  the  statistics  of  trade  between  the  United 
States  and  France,  we  find  a  condition  in  sharp  contrast  to  that 
shown  ])y  the  English  trade  returns.  France  has  hardly  heard 
of  the  American  invasion.  Her  sales  last  year  stood  at  almost 
the  same  point  that  they  did  ten  years  ago.  Our  sales  to  France 
during  the  same  jieriod  have  shown  some  increase,  but  taking 
the  record  of  last  year  and  comparing  it  with  ten  \ears  ago 
the  increase  is  but  $18,000,000,  while  we  remember  that  our 
annual  sales  to  hjigland  increased  in  the  last  half-dozen  years 
$244,000,000.  France  has  done  everything  she  can  with  a  high 
protective  tarifT  to  make  competition  dif^cult  to  foreign  manu- 
facturers. She  has  done  even  more  than  that,  witli  legislation 
which  has  in  some  instances  made  foreign  conijunition  impos- 
sible without  any  regard  to  ])rice.  The  franchises  which  have 
recently  been  granted  to  many  electric  railwaxs  have  provided 
that  all  material  for  their  construction  and  e(|ui|)ment  must 
originate  and  be  manufactured  in  h^rance. 

The  exports  of  France  are  in  the  main  of  a  kind  that  is  not 
affected  by  the  underbidding  of  foreign  makers,      l-'reiicli  deft- 


COMMKRCIAI,    INVASION-    OK    Kl  ROl'K 


91 


ness.  that  artistic  touch  which  the  workers  of  feu  oihcr  nations 
can  equal  gives  a  permanence  to  her  hold  on  those  foreii^n  mar- 
kets in  which  she  is  interested  which  has  l)een  httlc  alTcctcd  l)y 
those  industrial  developments  that  have  made  such  pr»)found 
impression  upon  the  trade  relations  amon^-  hjigland.  Germany, 
and  the  United  States.     In  ponderous  lines  of  mamifacturinj^ 


An  American  Steam  Shovel  at  Work  on  the  Moscow,  Jaroshv  6-  Arclianjiebk 
Railway  between  Volog:da  and  Archanirelsk,  Russia. 


hut  the 


we  have  reached  uncjuestioncd  sui)enonty  over  1" ranee, 
same  sort  of  skill  which,  in  the  finirers  of  tlie  Tarisian  workini;- 
women  produces  articles  of  unapproachahle  attractiveness,  de- 
velops in  the  hands  of  the  mechanic  into  a  deftness  which  rivals 
the  ingenuity  of  our  best  workmen,  and  leaves  us  without  the 
advantage  in  the  French  market  that  we  have  in  most  of  the 
other  markets  of  the  world. 


02  THE    AMERICAN 

Russia  is  another  country  which,  in  spite  of  its  enormous  ex- 
tent, its  important  position  in  the  world's  politics,  and  the  tradi- 
tionally friendly  relations  between  its  peoples  and  our  own.  has 
been  little  affected  by  the  "  American  invasion."  With  territory 
covering  an  eighth  of  the  globe,  and  a  population  of  130,000.000, 
the  trade  between  this  greatest  of  political  units  and  our  own 
countrv  is  still  comparatively  insignificant,  and  has  in  the  last 
decade  shown  no  remarkable  changes.  Our  exports  have 
shown  no  significant  increase.  Russia  is  a  country  of  high  tariff, 
and  the  tendency  is  toward  greater  protective  restrictions  about 
her  domestic  industries.  That  policy  has  resulted  in  a  number 
of  American  manufacturers  building  important  plants  within  the 
empire,  but  it  has  effectually  prevented  any  remarkal)le  develop- 
ment in  our  grasp  of  the  Russian  markets. 

I  asked  M.  de  Witte.  the  Russian  Finance  ^Minister,  how  in 
his  opinion  commercial  relations  between  the  Ignited  States  and 
Russia  could  be  improved. 

"  Practicallv,  there  is  nothing  that  can  be  done."  he  said. 
"Theoretically,  there  arc  unlimited  ]iossibilities.  If  you  only 
had  a  government  that  could  do  things  as  our  government  can. 
a  combination  of  the  two  countries  would  bring  Europe  to  our 
feet.  We  could  absolutely  control  the  markets  of  the  world 
for  meat,  bread,  and  light.  1  understand,  of  course,  that  that 
is  impossible — impossil)le  from  your  side.  \\'c  could  do  it.  but 
you,  with  your  government,  which  must  always  listen  to  the 
people  and  sha]ie  its  course  for  political  reasons,  could  not." 

It  is  i)o?sil)1c  that  the  unattainableness  of  political  unity  of 
action  whicli  the  distinguished  Russian  deprecated  may  in  cft'ect 
be  in  some  measure  worked  out  by  the  combinations— the  in- 
dustrial trusts— which  have  such  great  influence  in  various  fields 
and  which  arc  able  to  project  into  the  connnercial  battle  such 
effective  unified  efforts.  European  economists  and  industrial 
leaders  are  undoubtedly  more  alarmed  over  the  advantages 
which  they  see  we  are  attaining  by  the  aid  of  these  great  organi- 
zations than  over  anv  other  point  in  our  position. 


"  COMMKRCIAL    IWASION"    OF    KlROI'i:         (^  ^ 

I  have  attcni])toil  in  these  articles  tn  (.uthiu'  some  »•!'  the 
weaknesses  o\  our  foreign  eonipetilors  and  some  of  the  eone- 
sponding  points  of  strength  that  ha\e  developed  in  onr  own  in- 
dustries. The  list  of  oin-  advanlai;es  is  an  imposing;  otu-.  l»nt  we 
cannot  expect  that  all  of  them  will  he  maintained.  (  )ur  com 
petitors  are  hy  no  means  hlind  or  without  energy  or  ahilitw 
The  superiority  of  our  lahor,  our  larger  u.se  of  machinery,  our 
low  taxation  and  small  military  hurden,  the  homogeneity  of  our 
jieople  and  the  great  breadth  of  the  domestic  tleitl  of  consump- 
tion, our  comparative  freedom  from  militant  trades-imionism. 
the  omnipotence  with  us  of  the  industrial  ideal,  onr  freedom 
from  a  caste  which  in  other  countries  prevents  the  best  brain 
and  the  most  highly  trained  intellect  from  engaging  in  industrial 
enterprise — all  these  are  advantages  whicli,  so  long  as  they  hold 
good,  make  a  broad  foundation  upon  which  to  rest  an  in<hi>trial 
development  of  commanding  importance.  lUu  unless  the 
L'nited  States  has  some  more  permanent  and  fundamental  ad- 
\antage,  I  should  lack  the  absolute  faith  which  1  now  have  in 
our  development  to  a  lasting  commercial  supremacy.  Xo  small 
part  of  our  great  exports  in  the  last  few  years  has  been  made  up 
of  labor-saving  machines,  which  have  at  once  been  turned  against 
us  as  guns  captured  from  an  enemy,  h'rom  all  o\er  hurojje 
deputations  of  technical  experts  are  journeying  to  the  I'nited 
States  and  taking  abundant  ad\antage  of  our  good-nature  and 
hospitality.  They  praise  our  machines  and  make  drawings  of 
them;  thev  satisfy  our  pride  with  aj^prcciations  of  our  methods 
and  thev  make  coi)ious  notes.  The  residt  is  beginning  to  be 
seen  in  almost  every  workshop  of  luu-ojje. 

There  can  be  no  American  mono])oly  of  ideas.  (  i\ili/ation 
gives  no  jjatent  on  technical  supremacy,  .\merica  may  lead  the 
world  now  in  her  ingenious  api)lication  of  lahor-.saving  machin- 
erv.  but  there  can  be  no  assurance  of  the  permanent  continuance 
of  that  advantage.  Xor  can  assurance  be  given  that  .American 
industrial  society  will  always  remain  as  mobile  and  as  energetic 
as  it  is  at  i)resent.      We  have  already  secM-i  trades-union>  attempt 


Dmu'H  i-y    Otto  H.  Backer  from  a  photografk. 

The  Opening  of  an  American-equipped  Electric  Line  in  Glasgow. 


"COMMKRCMAI.    INVASION"    ()\     l.lRoPK 


')S 


ing  to  force  cmploxcrs  to  make  wcrk  rather  than  to  i)r(Mlueo 
wealth.  We  have  seen  strikes  that  have  had  tor  their  ha^i>  only 
a  desire  for  an  increased  i)o\ver  of  interference,  and  from  that  it 
is  not  a  long-  step  to  a  position  where  imion  labor  may  he  fonnd 
struggling  to  restrict  individual  production.  Strikes  of  that 
character  have  so  far  been  successfully  combatetl.  but  whatever 
there  is  left  of  the  spirit  that  animated  them  remain>  a  menace 
to  American  prosperity. 

In  our  national  conception  of  the  dignity  of  work  we  have  an 
enormous  advantage,  but  that  also  may  be  in  danger.  Thus  far 
industrial  rewards  have  l)een  made  pretty  strictly  on  a  merit  basis. 
There  have  been  few  sons  and  nephews  of  rich  families  to  be 
taken  care  of.  The  future  generation  can  hardly  be  so  free 
from  nepotism  in  industrial  promotion.  With  the  increase  of 
wealth  we  ha\e  already  the  beginning  of  a  leisure  class,  and  it 
is  not  certain  that  industrial  and  commercial  life  can  continue 
to  command  the  full  service  of  the  best  brain  and  energy  that 
we  have.  Our  military  burdens  may  increase  if  we  measure  up 
to  the  full  extent  of  our  responsibilities  as  a  woidd-p.ower.  Tariff 
walls  may  be  built  against  us. 

On  all  these  points  of  present  superiority  we  can  have  but 
small  assurance  of  a  lasting  industrial  supremacy,  but  I  feel  that 
a  more  fundamental  reason  for  l)elief  in  such  supremacy  can  be 
advanced,  one  which  will  warrant  the  conclusion  that  .\merica 
must  inevitably  lead  the  world  in  the  twentieth-century  com- 
mercial struggle. 

Of  all  nations  the  United  States  has  the  ni(.st  unbounded 
wealth  of  natural  resources.  We  have  hardly  comprehended 
the  inevitable  advantages  which  those  resoiu-ces  arc  to  give  us. 

Man's  labor  the  world  over  is  steadily  decreasing  in  impor- 
tance. It  is  the  age  of  machinery.  The  forces  of  nature  are 
to  do  man's  w(jrk.  All  the  world  over  the  cost  of  production 
has  fallen.  The  relative  imp(jrtance  of  labor  in  the  cost  of  pro- 
duction is  lessening;  the  sway  of  machinery  is  increasing.  'Ihc 
twentieth   centurv    will   be   the    century   of  machinery.      P.eforc 


96  THE    AMERICAN 

it  is  half  completed  we  may  expect  to  see  that  sort  of  human 
labor  that  is  the  painful  and  laborious  exercise  of  muscle  almost 
supplanted  by  automatic  machinery  directed  by  trained  intelli- 
gence. Such  development  of  machine  production  steadily  in- 
creases the  importance  of  raw  material  in  the  productive  process. 
As  the  proportion  of  labor  cost  decreases,  the  cost  of  the  raw 
material  forms  a  larger  part  of  the  value  of  the  finished  product. 

The  hand-weaver  took  a  pound  of  cotton  and  spent  a  week 
in  its  manipulation.  The  cloth  had  to  reimburse  not  only  the 
cost  of  the  pound  of  cotton,  but  six  days  of  toil.  Machinery 
was  introduced  into  the  industry,  a  week  became  an  hour,  and 
a  hundred  yards  took  the  place  of  one.  The  price  of  each  yard 
then  had  to  pay  the  merest  fraction  of  the  cost  of  the  labor 
which  watched  the  looms.  The  proportion  which  the  cost  of 
the  raw  material  bore  to  the  cost  of  the  finished  product  enor- 
mously increased.  So  under  these  modern  conditions  of  manu- 
facturing industry,  where  machinery  enters  more  and  more 
into  the  manipulation,  and  the  cost  of  labor  forms  a  constantlv 
decreasing  relation  to  the  whole,  raw  material  comes  to  play 
a  more  and  more  important  part.  When  machinerv  has 
fully  entered  into  production,  the  cost  of  the  crude  products 
makes  up  the  major  part  of  the  cost  of  the  finished  article. 
We  can  in  a  measure  reduce  the  cost  of  raw  material  by  improved 
methods  in  production  and  in  transportation.  The  steam  hoist 
and  electric  drill  in  the  mine,  the  steam  harvester  and  the  steam 
plough  on  the  farm,  the  mogul  engine  and  the  hfty-ton  car, 
fast  steamships  of  huge  tonnage,  have  all  greatly  reduced  the 
price  of  raw  material.  liut  no  matter  how  strong  the  appeal. 
Mother  Nature  fields  a  slow  and  grudging  consent  to  the  efforts 
of  her  children  to  relax  her  grip.  Alan's  success  in  chcajiening 
raw  material  must  always  fall  short  of  achievements  in  the  realm 
of  manufacture. 

Since  the  cost  of  material  is  an  increasing  jiart  of  the  price 
of  the  product,  those  producers  who  can  draw  upon  practically 
inexhaustible  and  rich  supplies  near  at  hand,  who  are  not  obliged 


"COMMERCIAL    INXASION  "    OK    KlRoi'K 


97 


to  work  poor  ores  ami  poor  lands,  or  t..  iran^pori  iiialcrials  great 
distances — ^the  produccMs  and  tlic  nation  with  iIk.sc-  blessings 
are  at  tremendous  advantage  when  compared  with  others  whose 
supplies  of  material  are  less  rich  and  less  atlvanlageously  Iocate<l. 

The  age  of  machinery  is  also  the  age  of  motive  power,  which 
is  but  another  way  of  saying  that  it  is  the  age  of  coal.  The  na- 
tion which  has  the  cheapest  raw  material  and  the  cheapest  coal 
has  a  permanent  and  predominant  advantage  in  the  world's  mar- 
kets, and  it  is  an  advantage  which  every  improvement  in  method 
of  manufacture  will  only  serve  to  emphasize. 

When  so  much  is  admitted,  the  conclusion  innnediately  fol- 
lows that  America's  industrial  future  is  secured.  The  I'nited 
States  has  the  most  abundant  and  the  cheapest  raw  materials  and 
supplies  of  fuel  in  the  world.  (lermans  and  I'jiglishmen  may 
dispute  with  us  over  relative  advantages  in  luethods.  in  machin- 
ery, in  labor,  in  business  organization,  and  in  conuuercial  prac- 
tice. They  may  claim  that  they  have  much  to  teach  us  and  that 
they  can  soon  learn  what  we  have  to  teach  them.  American 
labor  may  contract  the  disease  of  trades-unionism,  and  American 
public  burdens  and  social-caste  developments  may  lessen  our 
advantage.  But  American  soil  and  minerals  are  eternal,  and 
the  resources  of  no  other  great  power  are  for  one  momeiu  to 
be  compared  with  thern. 


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